THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 


R  E  P  O  K  T 


OF  THE 


SENATE  SELECT  COMMITTEE 


OH 


INTERSTATE  COMMERCE. 


(WITH   APPENDIX.) 


FORTY-NINTH  CONGRESS,  FIRST  SESSION.— SUBMITTED  TO  THE 
SENATE  JANUARY  18,  1886. 


WASHINGTON: 

GOVERNMENT   PRINTING  OFFICE. 
1886. 


TABLE   OF  CONTENT& 


1.  Introductory 1 

Plan  of  Work  Adopted 2 

Importance  of  the  Question £ 

2.  The  Railroad  System  of  the  United  States— Its  Evolution  and  Extent— Ita  Im- 

portance in  Commercial  Transactions 3 

The  Results  of  Railroad  Building 6 

The  Progress  of  Railroad  Construction 7 

Magnitude  of  the  Railway  Service 10 

The  Railroad  Statistics  of  1884 10 

3.  The  Internal  Commerce  of  the  United  States — Illustrations  of  tts  Importance 

and  Proportions 14 

The  Eastbound  Traffic  of  the  Trunk  Lines 17 

The  Westbound  Traffic  of  the  Trunk  Lines 20 

The  Cotton  Crop  of  the  United  States 21 

The  Relations  of  Internal  and  External  Commerce  to  Agriculture 25 

4.  The  Power  of  Congress  to  Regulate  Commerce — A  Review  of  the  Declarations 

of  the  United  States  Supreme  Court  on  the  Subject 28 

The  Definition  of  Commerce 30 

What  Interstate  Commerce  Is 32 

What  is  Meant  by  Regulation 38 

The  Propositions  Established 39 

The  Legal  Status  of  the  Common  Carrier 39 

5.  The  Relations  of  the  Railroad  to  the  Community  and  to  the  Governmental 

Authority — The  Obligations  Imposed  by  its  Public  Nature  and  its  Ex- 
ercise of  a  Public  Function 40 

Some  of  the  Difficulties-of  Effective  State  Regulation 43 

Irresponsible  Railroad  Management 45 

The  Protection  of  Stockholders 47 

The  Construction  of  Unnecessary  Railroads 48 

Fictitious  Capitalization,  or  Stock  Watering 51 

0.  The  Various  Methods  of  Railroad  Regulation 52 

7.  The  Course  of  Railroad  Legislation  in  England — Workings  of  the  English  Com- 

mission— The  Present  Status  of  Affairs 54 

8.  Railroad  Legislation  in  the  United  States — Summary  of  the  Provisions  of  the 

State  Statutes— The  Work  of  the  State  Commissions 63 

The  State  Railroad  Commissions 64 

List  of  the  Commissioners 65 

Massachusetts 66 

Illinois 71 

New  York 74 

Georgia 78 

Alabama ,  83 


ill 


631993 


TABLE  OF  CONTENTS. 


8.  Railroad  Legislation  in  the  United  States,  &c.—  Continued. 

Arizona  and  Arkansas..'  .................................................     *® 

California  .............................................  .......  ..........     86 

Colorado  ..............................  -  ...........  -  .......  -  ............     : 

Connecticut  ............................................................     93 

Dakota  .................................................................     95 

Delaware  ...............................................................     97 

Florida,  IddTio,  and  Indiana  .............................................     98 

Iowa  .....................  ---  ...........................................     98 

Kansas  .................................................................  102 

Kentucky,  Louisiana,  and  Maine  ........................................  107 

Maryland,  Michigan,  and  Minnesota  .....................................  109 

Mississippi  ...................................................  -  ..........  Ill 

Missouri  ................................................................  112 

Montana  and  Nebraska  ..................................................  113 

Nevada  ...............  -  ....................  -  .........  ......  .............  115 

New  Hampshire  .........................................................  116 

New  Mexico,  New  Jersey,  and  North  Carolina  ............................  118 

Ohio  and  Oregon  ........................................................  119 

Pennsylvania  .............................................  -  .............  122 

Rhode  Island  ...........................................................  124 

South  Carolina  .........................................................  125 

Tennessee  .......  ...................  .  ...........  .  .............  .  ........  127 

Texas  ..................................................................  131 

Utah,  Vermont,  and  Virginia  ............................................  132 

Washington  Territory  and  West  Virginia  ................................  134 

Wisconsin  ..............................................................  135 

Wyoming  .....................................  ..  ........................  137 

9.  The  Comparative  Volume  of  State  and  Interstate  Traffic  —  Returns  from  Lead- 

ing Railroads  showing  their  Business  thus  Divided  ...................  137 

10.  Competition  Between  Water-  Ways  and  Railroads  —  Water  Routes  the  Most 

Effective  Regulators  of  Railway  Charges  .............................  167 

The  Effect  of  Water  Competition  on  Railway  Charges  ....................  170 

The  Erie  Canal  .........................................................  170 

The  Mississippi  River  and  Its  Tributaries  ................................  173 

The  Proposed  Hennepin  Canal  .......................................  ...  173 

The  Emancipation  of  the  Waters  ........................................  174 

11.  The  Necessity  of  National  Regulation  of  Interstate  Commerce  ...............  175 

12.  The  Causes  of  Complaint  Against  t  he  Railroad  System  ......................  180 

13.  Railroad  Rates  —  The  Principles  Upon  Which  they  Should  be  Established,  and 

the  Limitations  Within  Which  Discrimination  May  be  Justifiable  ____  182 

Charging  "What  the  Traffic  Will  Bear"  .................................  184 

The  Classification  of  Freights  ............................................  185 

Uniformity  of  Classification  .............................................  187 

Discriminations  Between  Persons  ........................................  188 

Concessions  to  Large  Shippers  ..........  .  ..............  ..  ....  .........  ...  190 

Discriminations  Between  Places  .........................................  191 

The  Fixing  of  Bates  By  Legislation  Impracticable  .......................  194 

Rates  on  Long  and  Short  Hauls  .........................................   195 

14.  Publicity  the  Best  Remedy  for  Unjust  Discrimination  —  The  Posting  of  Rates 

Under  the  Direction  of  a  Commission  Recommended  ..................  198 

Cases  that  Publicity  Would  Uncover  ....................................  199 

What  the  Posting  of  Rates  Would  Mean  .................................  200 

The  Question  of  Pooling  .................................................  200 

The  Prohibition  of  Changes  Without  Notice  ..............................  201 


TABLE    OF    CONTENTS.  V 

Page. 

14.  Publicity  the  Best  Remedy  for  Unjust  Discrimination,  &c. — Continued. 

Difficulties  in  the  Way  of  Enforcing  Publicity 202 

A  System  of  Licenses 205 

What  Kates  Should  Be  Posted 206 

15.  A  National  Commission — Its  Establishment  Recommended  for  the  Enforce- 

ment of  the  Legislation  Proposed.... 208 

16.  The  Committee's  Bill   215 

[NOTE. — An  index  to  the  Report  and  to  the  Appendix  will  be  found  at  the  conclu- 

Ftion  of  this  volume.    The  testimony  taken  by  the  Committee  is  printed  in  a  separate 
volume.] 


s,  i  -SENATE.  i  KEPOKT 

1st  Session.        J  (  No.  46. 


IN  THE  SENATE  OF  THE  UNITED  STATES. 


JANUABY  18,  1886.— Ordered  to  be  printed. 


Mr.  CULLOM,  from  the  Committee  on  Interstate  Commerce,  submitted 

the  following 

REPORT: 

[To  accompany  bill  S.  1093.] 

The  select  committee  appointed  to  investigate  and  report  upon  the  subject  of 
the  regulation  of  the  transportation  of  freights  and  passengers  beticeen 
the  several  States  by  railroad  and  water  routes  respectfully  submit  the 
following  report : 

The  committee  was  appointed  by  the  President  of  the  Senate  March 
21,  1885,  under  authority  of  a  resolution  adopted  by  the  Senate  of  the 
United  States  March  17,  1885,  and  reading  as  follows : 

Resolved,  That  a  select  committee  of  five  Senators  be  appointed  to  investigate  and 
report  upon  the  subject  of  the  regulation  of  the  transportation  by  railroad  and  water 
routes  in  connection  or  in  competition  with  said  railroads  of  freights  and  passengers 
between  the  several  States,  with  authority  to  sit  during  the  recess  of  Congress,  and 
with  power  to  summon  witnesses  and  to  do  whatever  is  necessary  for  a  full  examina- 
tion of  the  subject,  and  report  to  the  Senate  on  or  before  the  second  Monday  of  De- 
cember next.  Said  committee  shall  have  power  to  appoint  a  clerk  and  stenographer, 
and  the  expenses  of  such  investigation  shall  be  paid  from  the  appropriation  for  ex- 
penses of  inquiries  and  investigations  ordered  by  the  Senate. 

The  committee  began  its  work  impressed  with  the  importance  of  the 
duty  with  which  it  had  been  charged,  and  with  each  step  taken  in 
prosecuting  the  inquiry  directed  has  realized  more  fully  how  serious 
were  the  obstacles  to  be  overcome  in  attempting  to  faithfully  carry  out 
its  instructions.  The  field  opened  up  for  investigation  was  so  exten- 
sive, the  social,  economic,  legal,  and  other  questions  involved  so  com- 
plicated, and  the  agricultural,  commercial,  industrial,  and  corporate 
interests  affected  so  vast  and  varied  as  to  require  for  a  thorough  and 
satisfactory  examination  into  technical  details  more  time  and  labor  than 
could  be  given,  with  the  facilities  at  command,  during  the  summer 
recess  of  the  Senate. 

As  the  committee  was  unable  to  avail  itself  of  the  assistance  of  ex- 
perts in  the  different  branches  of  the  inquiry,  being  restricted  to  the 
employment  of  a  single  clerk,  the  investigation  could  not  be  made  as 
comprehensive  and  searching  in  the  matter  of  collecting  technical 
information  and  compiling  detailed  statistics  as  the  importance  of  the 
subject  deserved.  Under  these  circumstances  the  conclusion  was 
reached  that  the  committee  would  best  serve  the  public  interest  and 
carry  out  the  purpose  of  the  resolution  under  which  it  was  appointed 
by  devoting  its  attention  mainly  to  the  consideration  of  the  question 
whether  any  legislation  to  regulate  the  management  of  the  transporta-. 
lion  lines  of  the  country  is  advisable,  and.  if  so.  what  the  scope  and 
character  of  that  legislation  should  be.  This  is  the  question  that 
awaits  the  decision  of  Tonyi-cx. 


2  INTERSTATE    COMMERCE. 

The  committee  has  endeavored  to  obtain  information  that  would  be 
of  practical  value  in  the  decision  of  this  question,  and  presents  the  re- 
sults of  its  work,  confidently  believing  that  it  will  be  of  service  to  those 
who  are  seeking  the  solution  of  what  is  known  as  "  the  railroad  prob- 
lem." 

PLAN   OF   WORK   ADOPTED. 

As  it  was  understood  to  be  the  desire  of  the  Senate  that  the  com- 
mittee should  endeavor  to  ascertain  what  causes  of  complaint  existed 
against  the  corporations  engaged  in  transportation  between  the  several 
States  and  the  opinions  of  the  people  as  to  what  remedies  could  be 
applied  by  Congress,  arrangements  were  made  to  visit  some  of  the 
leading  commercial  centers  of  the  United  States  and  take  testimony. 
\Public  notice  was  given  of  these  hearings,  and  efforts  were  made,  by 
correspondence  and  otherwise,  to  secure  the  attendance  of  those  most 
competent  to  speak  as  the  representatives  of  every  interest  and  of  every 
shade  of  opinion.  With  the  view  of  suggesting  subjects  for  discussion 
at  these  hearings  and  of  indicating  to  those  invited  to  appear  the  line 
of  examination  to  be  pursued  and  to  allow  time  for  preparation,  the 
committee  issued  a  circular,  containing  a  series  of  interrogatories,  calling 
attention  to  the  questions  that  have  been  most  prominently  agitated  of 
late  years  in  connection  with  efforts  to  control  the  railroad  corporations 
by  legislation.  At  the  same  time  an  extensive  correspondence,  reach- 
ing into  all  parts  of  the  United  States,  was  carried  on,  and  written 
statements  were  solicited  from  localities  which  the  committee  found  it- 
self  unable  to  visit,  as  well  as  from  persons  who  could  not  appear  at  the 
public  hearings. 

In  the  course  of  this  correspondence  letters  and  circulars  were  sent 
to  the  railroad  commissioners  of  the  several  States,  to  the  boards  of 
trade,  chambers  of  commerce,  and  the  numerous  other  commercial  and 
business  exchanges  and  associations  of  every  character  throughout  the 
country,  to  the  president  of  each  State  board  of  agriculture  or  State 
agricultural  society,  to  the  master  of  each  State  grange  of  the  Patrons 
of  Husbandry  in  the  United  States,  to  the  secretary  of  the  Farmers'  Al- 
liance in  each  State  and  Territory  where  organized,  to  railroad  managers, 
and  generally  to  gentlemen  who  were  known  to  have  given  special  at- 
tention to  the  transportation  question  in  any  of  its  different  phases. 
Especial  efforts  were  made  to  reach  those  whose  opinions  were  most 
valuable  as  the  representatives  of  the  producing  interests  or  by  reason 
of  their  study  of  the  subject  or  practical  experience;  but  the  committee, 
while  gratified  at  the  success  which  attended  these  efforts,  is  not  dis- 
posed to  claim  that  all  were  reached  who  should  have  been  heard  in  an 
investigation  covering  so  broad  a  field. 

IMPORTANCE  OF  THE  QUESTION. 

The  testimony  taken  and  the  statements  received  by  the  committee 
in  response  to  this  correspondence  are  herewith  submitted  as  fairly 
representing  the  best  thought  of  the  American  people  upon  the  ques- 
tions involved  in  the  regulation  of  commerce  among  the  States.  These 
statements  are  a  very  valuable  contribution  to  the  literature  of  this 
subject  and  give  the  strongest  evidence  of  its  position  in  the  public 
mind  as  one  of  the  most  important  and  controlling  questions  now  before 
the  country.  The  interest  everywhere  manifested  in  its  investigation 
has  convinced  the  committee  that  no  general  question  of  governmental 
policy  occupies  at  this  time  so  prominent  a  place  in  the  thoughts  of  the  peo\ 


INTERSTATE    COMMERCE.  3 

pleas  that  of  controlling  the  steady  growth  and  extending  influence  of  cor  ~ 
por ate  power  and  of  regulating  its  relations  to  the  public  ;  and  as  uo  cor- 
porations are  more  conspicuously  before  the  public  eye,  and  as  there 
are  none  whose  operations  so  directly  affect  every  citizen  in  the  daily 
pursuit  of  his  business  or  avocation  as  the  corporations  engaged  in 
transportation,  they  naturally  receive  the  most  consideration  in  this 
connection. 

That  the  industrial  and  commercial  welfare  of  the  country  may  be 
materially  affected  by  the  wisdom  or  unwisdom  of  the  policy  which 
may  be  pursued  by  the  governmental  authority  in  the  determination 
and  enforcement  of  the  respective  rights  and  obligations  of  the  citizen 
and  the  railroad  will  more  clearly  appear  from  a  consideration  of  the 
facts  hereinafter  advanced  as  to  the  extent  and  far-reaching  influence 
of  the  railroad  system  of  the  United  States  and  as  to  the  commanding 
proportions  attained  by  the  internal  commerce  dependent  upon  that 
system  for  its  existence. 

THE  RAILROAD  SYSTEM  OF  THE  UNITED  STATES— ITS 
EVOLUTION  AND  EXTENT— ITS  IMPORTANCE  IN  COM- 
MERCIAL TRANSACTIONS. 

The  present  century  has  witnessed  the  introduction  of  new  forces  in 
every  department  of  civilized  life,  but  none  have  brought  about  more 
marvelous  changes  than  has  the  railroad  as  an  aid  to  and  an  instru- 
mentality of  commerce.  The  commercial,  social,  and  political  relations 
of  the  nations  have  been  revolutionized  almost  within  the  last  fifty 
years  by  the  development  of  improved  means  of  communication  and 
transportation.  Previous  to  that  period  each  nation  lived  almost 
wholly  within  itself.  There  was  little  intercommunication,  and  ex- 
changes of  products  were  limited  to  an  extent  that  can  to-day  scarcely 
be  realized.  The  commerce  of  the  world  was  for  centuries  conducted 
almost  exclusively  upon  the  sea,  and  its  proportions  were  insignificant 
in  comparison  with  the  foreign  trade  of  any  leading  nation  to-day.  By 
the  construction  of  turnpikes  and  canals  and  the  development  of  river 
navigation  international  trade  gradually  began  to  grow  up,  but  barri- 
ers existed  at  every  frontier;  the  transmission  of  intelligence  was  uncer- 
tain and  expensive ;  through  routes  were  almost  unknown ;  long  distance 
transportation  was  impossible  except  by  water,  and  there  was  actually 
but  little  communication  or  trading  between  different  nations  or  even 
between  distant  parts  of  the  same  country. 

All  this  has  wonderfully  changed  within  the  past  fifty  years.  The 
change  began  about  the  beginning  of  the  present  century  with  the  rev- 
olution of  the  shipping  business  occasioned  by  the  use  of  steam,  and 
since  the  successful  adaptation  of  this  force  to  ocean  carriers  became 
assured,  about  forty  years  ago,  sailing  vessels  have  been  engaged  in  an 
unequal  contest  for  trade  with  those  propelled  by  steam.  The  latter 
now  comprise  at  least  25  per  cent,  of  the  world's  tonnage,  which  is  esti- 
mated to  have  increased  from  5,000,000  in  1830  to  20,000,000  in  1880, 
while  their  carrying  capacity  is  relatively  greater  because  of  their  su- 
perior speed.  Fifty  years  ago  the  mails  were  irregular  and  infrequent, 
while  the  charges  were  almost  prohibitory.  Commerce  received  a  new 
impetus  by  the  introduction  of  postage-stamps  in  1840  and  the  sweep- 
ing reduction  made  by  England  at  that  time  in  postal  rates,  which  were 
cut  down  to  one  tenth  of  the  previous  charges.  Within  the  next  ten 
years  the  leading  countries  of  Europe  and  the  United  States  adopted 
the  policy  of  cheap  postage  ami  -iivjilly  increased  the  efficiency  of  their 
postal  service.  There  has  sin*-,-  hr<>n  n  steady  improvement  and  ex- 


4  INTERSTATE    COMMERCE. 

tension  of  the  system  throughout  the  world,  with  constant  reductions 
in  rates,  until  every  civilized  country  has  united  with  the  Postal  Union 
organized  ten  years  ago ;  the  poorest  citizen  can  afford  to  transmit  a  let- 
ter to  any  part  of  the  globe,  and  the  number  of  letters  and  packages 
distributed  by  mail  annually  is  10,000,000,000.  During  the  same  period 
another  revolution  in  the  transmission  of  intelligence  and  methods  of 
business  has  been  effected  by  the  invention  of  the  telegraph,  which  dates 
from  1837,  the  first  American  line  being  constructed  in  1844  by  the  aid 
of  the  General  Government.  The  extent  of  this  change  is  indicated  by 
the  statistics,  which  show  that  there  are  now  in  operation  600,000  miles 
of  line,  comprising  1,600,000  miles  of  wire. 

But  still  more  marvelous  have  been  the  changes  brought  about  in 
the  commercial,  political,  and  social  relations  of  nations,  communities, 
and  individuals  by  the  improved  facilities  for  transportation  and  inter- 
course afforded  by  the  railroad,  all  within  the  present  century,  and 
mainly  within  the  last  thirty-five  years.  Indeed,  the  changes  which 
have  been  alluded  to  have  consolidated  independent  communities  and 
sovereign  states  into  nations,  and  their  tendency  has  been  in  the  direc- 
tion of  concentration  and  consolidation  in  political  organization  as  well 
as  in  every  form  of  commercial  enterprise,  industry,  and  production. 
And  with  "this  changed  condition  of  affairs  in  the  commercial  world 
come  new  questions  of  the  greatest  importance  for  consideration  by 
those  upon  whom  the  people  rely  for  legislation  in  the  public  interest. 
Kailroads  are  the  arteries  through  which  flows  the  life-blood  of  the 
world's  commerce ;  and  to  promote  the  interests  of  commerce  is  their 
manifest  destiny  and  the  purpose  they  are  especially  fitted  to  serve. 
Governor  Horatio  Seymour  says :  "  The  chief  element  in  the  prosperity 
of  every  State  or  nation  is  the  economy  of  transportation  of  persons 
and  property.  It  is  the  marked  fact  in  the  difference  between  civili- 
zation and  barbarism."  In  the  settlement  of  this  country  the  "star  of 
empire"  closely  followed  in  its  continuous  westward  march  the  lines 
of  the  great  internal  water  courses,  the  first  available  means  of  inter- 
communication. The  advancing  tide  of  civilization  swept  by  and  around 
vast  regions  remote  from  the  great  rivers,  regions  in  which  prosperous 
States  have  since  grown  up ;  and  it  may  be  said  of  large  portions  ol 
our  imperial  Western  domain,  which  owe  their  development  to  the  build- 
ing of  railroads,  that  the  invention  of  the  locomotive  by  George  Stephen- 
sou  in  1830  marked  the  beginning  of  "  the  difference  between  civiliza- 
tion and  barbarism."  The  railroad,  as  an  improved  means  of  communi- 
cation and  transportation,  has  produced  indescribable  changes  in  all 
the  manifold  transactions  of  every-day  life  which  go  to  make  up  what 
is  called  commerce.  Successful  commerce  brings  prosperity,  which  in 
turn  makes  possible  the  cultivation  and  development  of  the  graces  and 
attributes  of  the  highest  civilization,  and  the  first  condition  precedent 
to  successful  commerce  is  "  the  economy  of  transportation  "  which  the 
railroad  has  afforded. 

The  railroad  system  of  the  United  States  is  the  marvel  of  the  world, 
and  its  expansion  has  been  so  rapid  and  unexpected  that  it  has  been 
impossible  during  the  progress  of  its  wonderful  development  to  deter- 
mine with  exactness  or  to  regulate  with  thoughtful  consideration  its 
proper  relations  to  the  citizen  or  to  the  governmental  authority.  At 
the  beginning  of  the  present  century  the  transportation  of  commodities 
of  exchange  for  any  'considerable  distance  within  the  United  States,  ex- 
cept by  water,  was  unknown,  and  passenger  journeys  were  attended 
with  hardship  and  difficulty.  Then  cairn  the  era  of  turnpike  roads, 
which  in  time  greatly  facilitated  through  travel  and  reduced  the  cost 


INTERSTATE    COMMERCE.  5 

of  transportation  overland.  TliLs  system  was  quite  thoroughly  devel- 
oped in  Pennsylvania.  New  York,  and  some  of  the  New  England  States, 
with  such  satisfactory  results  as  to  inaugurate  a  strong  movement  in 
favor  of  a  national  system  of  roads  constructed  with  the  aid  of  the 
General  Government.  All  that  was  accomplished  by  Congress  in  this 
direction,  however,  was  the  partial  construction  of  the  Cumberland 
Road,  the  "  National  Pike,"  projected  from  Washington  to  the  Missis- 
sippi. The  next  marked  improvement  in  transportation  facilities  came 
with  the  construction  of  canals.  This  system  of  internal  improvements 
was  inaugurated  by  the  State  of  Xew  York,  which  owes  its  commercial 
supremacy  very  largely  to  the  construction  of  the  Erie  Canal.  Work 
upon  this  enterprise  began  as  early  as  1808,  and  the  work  of  construc- 
tion began  in  1817,  and  it  was  finally  completed  m  1825,  at  a  cost  of 
$5,700,000.  Its  successful  operation  led  to  the  construction  of  other 
canals,  reduced  the  cost  of  transportation  very  greatly,  and  equally  in- 
creased commercial  intercourse  between  the  Eastern  seaboard  and  the 
interior. 

Then  came  the  railroad  and  the  problem  of  overland  transportation 
was  solved  when  the  locomotive  was  invented.  Those  first  constructed 
were  tramways  operated  by  horse-power,  the  use  of  steam  dating  from 
1831.  The  tables  submitted  by  Mr.  Henry  V.  Poor  (Testimony,  p.  221) 
show  at  a  glance  the  marvelous  extension  of  the  railroad  system  of  the 
United  States  from  what  now  seems  the  insignificant  beginning  of  23 
miles  in  operation  in  1830  to  the  more  than  125,000  miles  now  in  opera- 
tion, and  constituting  over  45  per  cent,  of  the  total  railway  mileage  of 
the  world. 

The  conditions  and  circumstances  that  environed  the  earlier  beginnings 
of  the  development  of  the  railroad  system  of  the  United  States  were  such 
that  it  is  easy  to  understand  why  no  comprehensive  and  uniform  plan  of 
regulation  was  then  thought  of  or  adopted.  The  question  theu  was  how 
to  get  railroads,  not  how  to  control  them.  Had  the  system  grown  up 
under  such  systematic  regulations  as  many  now  believe  would  have 
proved  advantageous,  the  commercial  relations  of  the  railroad  to  the  com- 
munity would  doubtless  have  been  adjusted  more  satisfactorily,  but,  on 
the  other  hand,  it  cannot  be  doubted  that  the  transportation  facilities  of 
the  country  could  not  as  rapidly  have  reached  their  present  magnificent 
proportions  under  any  other  conditions  than  those  which  have  so  success- 
fully stimulated  their  growth  and  expansion.  The  course  of  events  has 
been  inevitable.  It  was  a  matter  of  necessity  in  a  new  country  with  unde- 
veloped resources  and  struggling  with  other  burdens  which  fully  taxed 
its  capacity  that  the  work  of  railroad  construction  should  be  left  to  pri- 
vate enterprise.  Such  a  policy  was  also  in  accordance  with  the  genius 
and  spirit  of  our  institutions  and  Government,  and  the  rapid  evolution 
of  the  system  could  have  been  secured  only  as  it  was  secured — by  ottering 
every  encouragement  to  the  investment  of  private  capital  and  every 
temptation  to  speculation.  A  method  of  uniform  regulation  adopted 
at  the  outset  might  have  prevented  a  needless  waste  of  capital  and 
might  have  obviated  or  mitigated  existing  evils,  but  it  would  assuredly 
have  retarded  the  building  up  of  the  country  in  comparison  with  the 
progress  attained  under  freedom  from  legislative  restrictions.  If  a 
mistaken  policy  was  adopted  in  the  beginning,  it  is  questionable 
whether  its  resulting  general  advantages  do  not  outweigh  its  injurious 
effects.  Indeed,  it  may  be  said  that  in  a  certain  sense  the  evils  com- 
plained of  to-day  are  in  the  nature  of  a  mortgage  handed  down  for  pay- 
ment to  the  present  generation  as  its  share  of  the  price  paid  for  making 


6  INTERSTATE    COMMERCE. 

habitable  ;md  building  up  our  vast  domain  at  a  rate  of  progress  never 
equaled  in  any  other  country.  Freedom  from  legislative  restrictions 
has  facilitated  our  grand  achievements  in  this  direction,  and  it  is 
proper  that  the  very  important  part  played  by  the  rapid  increase  of  trans- 
portation facilitates  in  hastening  the  progress  and  advancing  the  pros- 
perity of  the  country  should  be  given  due  weight  by  those  who  now 
enjoy  and  profit  by  the  results,  as  at  least  a  partial  offset  to  the  inequal- 
ities with  which  they  may  be  obliged  to  contend. 

It  by  no  means  follows,  however,  that  regulation  is  not  now  needed, 
or  that  the  policy  which  was  adopted  in  the  beginning  as  a  matter  of 
necessity,  and  has  served  a  useful  purpose,  is  still  the  one  best  adapted 
to  the  present  requirements  of  the  country  and  should  be  permanently 
continued.  That  such  is  not  the  case  it  will  be  the  purpose  of  this  re- 
port to  show  ;  but  attention  has  been  invited  to  the  advantages  which 
have  followed  the  policy  of  non-interference  so  long  pursued  in  order  to 
emphasize  the  necessity  of  exercising  the  utmost  caution  in  so  shaping 
the  legislation  now  required  by  the  changed  condition  of  affairs  as  not 
to  check  the  future  progress  of  the  transportation  interests  of  the  coun- 
try, which  have  certainly  not  yet  reached  the  zenith  of  their  development. 

THE  RESULTS  OF  RAILROAD  BUILDING. 

The  first  railroads  were  modest  ventures,  designed  only  to  accommo- 
date a  local  constituency.  As  their  usefulness  became  recognized  short 
lines  were  constructed  between  points  where  the  need  of  better  trans- 
portation facilities  was  most  strongly  felt.  As  these  independent  lines 
increased  in  number  they  began  to  afford  opportunities  for  continuous 
travel  and  through-traffic,  which  developed  so  rapidly  that  it  was  soou 
found  to  be  worth  looking  after.  The  struggle  to  construct  through 
lines  led  to  a  uniting  of  their  forces  by  those  already  in  the  field  and 
to  a  modification  of  the  prohibitory  tolls  first  charged,  which  had  been 
based  largely  upon  the  rates  previously  established  for  local  traffic  by 
wagon  conveyance  over  the  common  highway. 

From  the  beginning  consolidations  have  been  a  continuous  and  con- 
spicuous feature  in  the  nistory  of  railroad  construction.  The  tendency 
to  consolidation  and  combination  has  been  equally  marked  in  every 
country  where  railroads  have  been  built,  and  has  apparently  grown 
stronger  from  year  to  year,  and  has  invariably  proved  too  powerful 
for  legislative  control.  Consolidations  between  continuous  lines  first 
made  through  traffic  possible,  and  the  immediate  result  of  the  improved 
facilities  of  intercourse  afforded  by  the  union  of  such  lines  under  one 
management  was  a  rapid  increase  of  traffic,  the  extension  of  estab- 
lished branches  of  trade,  and  the  development  of  new  industries. 

At  the  outset  the  railroads  were  obliged  to  depend  almost  entirely 
upon  local  traffic  for  their  support,  because  they  virtually  had  no  other. 
It  soon  became  evident  that,  after  a  road  had  been  built  and  equipped, 
the  question  of  profits  on  the  investment  depended  as  much  upon  the 
volume  of  business  carried  as  upon  the  rates  charged.  A  certain 
amount  of  business  could  be  depended  on  without  much  regard  to  what 
the  rates  were  so  long  as  they  did  not  exceed  those  previously  charged 
for  wagon  conveyance,  but  the  necessary  expenses  of  operation  would 
not  be  appreciably  increased  by  handling  a  much  larger  volume  of 
traffic.  This  led  to  the  making  of  rates  with  a  view  to  developing 
business  along  the  lines  of  the  respective  roads,  and  to  facilitate  the 
movement  of  products  which  had  not  been  previously  transported  be- 


INTERSTATE    COMMERCE.  ( 

cause  of  prohibitory  charges.  As  the  corporations  gained  strength  by 
successive  consolidations  they  began  to  reach  oat  in  all  directions  after 
traffic  and  soon  came  in  competition  with  each  other.  Then  the  policy 
of  developing  business  by  favorable  rates  was  extended  to  long  dist- 
ance transportation,  and  the  increase  in  traffic  and  in  the  business  of 
the  country  has  since  been  unparalleled.  By  constant  reductions  in 
rates  and  improvements  in  facilities  the  railroads  of  the  United  States- 
have  enormously  increased  the  business  of  the  country,  and  have  there- 
by performed  a  public  service  the  beneficent  results  of  which  are  indi- 
cated in  the  marvelous  progress  made  within  the  last  thirty  years  in 
commercial  and  industrial  pursuits. 

As  the  railroads  have  made  possible  and  facilitated  the  exchange  of 
products  throughout  the  whole  of  our  vast  territory,  the  natural  re- 
sources of  the  nation  have  been  developed  and  have  become  available, 
and  its  productive  power  has  been  wonderfully  augmented.  Through 
the  agency  of  the  railroad  the  vast  internal  commerce  of  the  country 
has  been  enabled  to  brush  aside  the  barriers  formerly  interposed  by  the 
limitations  of  distance  between  the  sources  of  supply  and  demand. 
The  producer  and  the  consumer,  however  widely  separated  in  fact,  are 
practically  being  made  next-door  neighbors,  and  this  is  becoming  true 
throughout  the  world  as  well  as  throughout  the  United  States.  The 
products  of  the  country  are  to  a  very  considerable  extent  dependent 
upon  the  railroads  for  the  means  of  transportation,  which  makes  them 
marketable,  and  the  railroad  system,  as  a  whole,  directly  or  indirectly 
affects  and  enters  into  every  business  interest,  while  its  operations  ex- 
tend into  every  portion  of  the  Union. 

The  policy  which  has  been  pursued  has  given  us  the  most  efficient 
railway  service  and  the  lowest  rates  known  in  the  world;  but  its  recog- 
nized benefits  have  been  attained  at  the  cost  of  the  most  unwarranted 
discriminations,  and  its  effect  has  been  to  build  up  the  strong  at  the 
expense  of  the  weak,  to  give  the  large  dealer  an  advantage  over  the 
small  trader,  to  make  capital  count  for  more  than  individual  credit  and 
enterprise,  to  concentrate  business  at  great  commercial  centers,  to  ne- 
cessitate combinations  and  aggregations  of  capital,  to  foster  monopoly, 
to  encourage  the  growth  and  extend  the  inflifence  of  corporate  power, 
and  to  throw  the  control  of  the  commerce  of  the  country  more  and  more 
into  the  hands  of  the  few. 

These  results  are  so  familiar  as  every-day  facts  that  they  scarcely 
attract  our  attention.  The  wonderful  transformation  in  all  economical 
conditions  to  be  attributed  to  the  use  of  the  railroad  is  not  yet  at  an 
end,  and  the  questions  presented  as  a  result  of  these  changes  demand 
the  most  earnest  investigation  and  the  most  thoughtful  consideration. 

It  only  remains  to  add  to  what  has  already  been  said  the  facts  here- 
\\ith  submitted  concerning  the  progress  of  railroad  construction  and 
the  magnitude  of  the  railway  service  to  illustrate  the  vast  extent  of 
the  railroad  interests. 

THE   PROGRESS   OF   RAILROAD   CONSTRUCTION. 

The  influence  of  railroad  construction  in  advancing  the  material  pros- 
perity of  the  country  is  illustrated  by  the  statistics  on  railroads  con- 
tained in  the  reports  of  the  Tenth  Census  (vol.  4).  It  is  only  necessary 
to  give  here  a  few  general  statements  condensed  from  that  report. 

The  aggregate  number  of  miles  of  road  built  in  the  United  States  from 


8 


INTEKbTATE    COMMKRCE. 


1830  up  to   1880  was  84,964.65,  ami  the  number  and  percentage  of  this 
aggregate  built  in  each  decade  was  (page  290) : 


Decade. 


Percent 

Miles  built.        of  ag- 
gregate. 


1830-1639*   

2,  264.  67 

2.6 

1840-1849*  

5,  045.  77 

5.7 

1850-1859*  

20,  109.  63 

22.9 

1860-1869*  

16,  090.  36 

18.3 

1870-1879*            ..      .     

41,  454.  22 

50.8 

'  Inclusive. 


The  increase  in  population  during  the  same  period  is  shown  as  fol- 
lows on  page  291 : 


Tear. 

Population. 

Per  cent, 
of  in- 
crease. 

1830  

12,  860,  702 

1840  

17,  063,  353 

32.7 

1850                ..                           

23  191  876 

35  9 

I860     ..   ..-  

31  443  321 

35.5 

1870  

38,  558  371 

22.6 

1880  

50  155,783 

30.1 

In  commenting  on  the  detailed  tables  given  it  is  stated  in  the  report 
(page  291)  that  u  construction  steadily  increased  during  the  first  three 
decades,  while  in  the  fourth  it  did  not  increase  at  the  same  rate  as  in 
the  previous  one,  as  22.9  per  cent,  of  the  aggregate  mileage  had  been 
built  in  the  former  and  only  18.3  per  cent,  in  the  latter.  The  cause 
for  this  proportionate  decline  must  be  attributed  to  the  effects  of  the 
civil  war.  The  steady  current  and  proportionate  rate  of  increase,  as 
exhibited  during  the  years  preceding  1861,  was  then  broken,"  and 
"  from  the  construction  of  1,499.72  miles  in  1860  it  fell  to  1,015.85  in 
1861,  to  720  in  1862,  and  to  573.90  in  1863 ;  recovered  to  947.40  in  1864, 
and  fell  off  again  to  818.72  miles  in  1865.  *  *  *  From  1866  con- 
struction received  a  new  impetus,  and  from  the  1,403.58  miles  built  in 
that  year  it  rose  steadily  in  every  succeeding  year  up  and  including 
1872,  when  it  had  reached  the  climax  with  7,449.04  miles,  the  highest 
number  built  in  any  year  from  1830  to  1880.  In  1873  another  de- 
cline from  previous  proportionate  increase  commenced,  and  not  until 
1879  did  construction  recover  its  former  proportions  of  increase.  In 
that  year  the  Territories  and  Pacific  and  Western  States  came  in  as  a 
main  factor  with  2,057.93  miles,  or  41  per  cent,  of  all  mileage  built  in 
the  United  States  during  that  year,  and  in  the  subsequent  six  mouths 
with  1,748.71  miles,  or  nearly  62  per  cent,  of  all  road  built  and  com 
pleted  during  that  period.  The  increase  in  construction  of  roads  dur- 
ing the  last  decade  was  unprecedentedly  rapid.  By  examining  Table 
B  it  will  be  observed  that  50.5  per  cent,  of  all  the  mileage  completed 
up  to  December  31,  1879,  was  built  during  the  fifth  decade  ;  also  that 
the  New  England  States  built  near  31  per  cent.,  the  Middle  States  41 
per  cent.,  the  Southern  States  near  30  per  cent,  the  Central  Western 
States  near  60  per  cent.,  Louisiana  and  Arkansas  over  61  per  cent.,  and 
the  Territories,  Pacific,  and  Western  trans  Mississippi  States  near  75 
per  cent,  of  all  their  mileage,  respectively,  during  the  same  decade. 


INTERSTA1E    COMMERCE. 


The  latter  group,  only  commencing  construction  in  the  third  decade  by 
building  one  half  of  one  per  cent,  of  all  the  mileage  constructed  in 
these  ten  years  (see  Table  B),  built  in  the  fourth  decade  near  21  per 
cent,  of  the  national  aggregate  constructed  and  near  24  per  cent,  in  the 
fifth  decade,  and  during  the  first  six  mouths  in  1880  it  built  near  62  per 
<-ent.  of  all  mileage  therein  constructed.  This  section  of  country,  which 
had  not  one  mile  of  road  previous  to  1856,  when  already  the  others 
aggregated  20,OUO  miles,  was  found  at  the  end  of  1879  toehold  fourth 
rank,  and  on  June  30, 1880,  the  third.  In  the  short  space  of  time — say 
twenty-five  years— this  section  advanced  from  48.19  miles  in  1856  to 
15,222.43  in  1880." 

An  instructive  comparison  between  the  increase  in  miles  of  road  built 
and  completed  and  the  population  in  the  United  States  during  the  five 
decades  ending  June  30, 1880,  is  made  in  the  following  table,  presented 
on  p.  304  of  the  same  report: 


Miles  of  road. 

Population. 

Decade. 

Built  in 
each 
decade. 

Per  cent,  of 
aggregate. 

Decade. 

Number  at 
end  of 
each  de- 
cade. 

Increase. 

Per  cent,  of 
aggregate 

Aggregate  
Jan.  1,  1830  

87,  801.  42 

100.0 

Aggregate  . 

37,  289,  763 

100.0 

June  30,  1830  

*12,  8(56,  020 

Jan.  1  1840  .. 

2,264.67 
5,  045.  77 
20,  109.  63 
16,  090.  36 
44,  290.  99 

2.6 

5.7 
22.9 
18.3 
50.5 

Jane  30  1840  

t!7,  069,  453 
23,  191,  876 
31,  443,  321 
38,  558,  371 
50,  155,  783 

4,  203,  433 
6,  122,  426 
8,  251,  445 
7,115,050 
11,  597,  412 

1L3 
16.4 
22.1 
19.1 
31.1 

Inn.  1  1850  

June  30,  1850  
Juno  30  1860 

Jan.  1,  1860  

Jan.  ],  1870  

June  30  1870 

June  30,  1880  

June  30  1880  .  ... 

*  The  mileage  built  was  reported  to  December  31,  inclusive,  in  each  respective  year  (see  Table  A) ; 
ihe  population  is  that  of  the  census  day  in  the  respective  census  vear  (Jane  30).  In  the  last  decade 
the  mileage  bnilt  in  the  six  months  up  to  June  30,  1880,  in  included. 

:  Including  persons  on  public  ships  in  the  service  of  the  United  States. 


As  is  said  in  the  report : 


The  preceding  table  shows  the  increase  in  railroad  construction  in  the  United  States, 
lorn  the  grading  of  the  first  mile,  in  1830,  to  June  30,  1880,  was  87,801.42  miles  of 
completed  road,  while  the  increase  of  the  population  daring  the  same  period  was  from 
1-J,  H>6,020  on  June  30, 1830,  to  50,  J  55,783  on  the  same  date  in  1880 ;  a  total  increase  of 
-9,763  since  construction  of  roads  commenced.  Taking  either  of  these  aggregates 
of  increase  as  a  basis  for  comparison,  there  is  found  in  the  first  decade  the  proportion 
of  2  6  per  cent,  of  the  aggregate  of  road  to  11.3  per  cent,  of  the  aggregate  increase  of 
population ;  in  the  second,  5.7  per  cent,  of  road  to  16.4  of  population ;  in  the  third, 
•22.9  of  road  to  22.1  of  population  :  in  the  fourth,  18.3  of  road  to  19.1  of  population  ; 
and  in  the  fifth,  50.5  of  road  to  31.1  of  population.  It  will  further  be  observed  by 
Table  I  that  in  the  first  two  decades  the  proportions  of  mileage  built  to  the  aggregate 
in  1880  was  considerably  below  the  relative  proportion  of  increase  made  in  population ; 
that  in  the  third  decade  it  was  equal  with  it,  and  declined  somewhat  below  that  of 
population  in  the  fourth  ;  and  that  in  the  fifth  and  last  decade  it  had  passed  and  was 
iar  in  advance  of  the  proportion  of  increase  in  population.  This  decade  shows  over 
50  per  cent,  of  all  the  road  constructed  to  only  31  per  cent,  of  the  aggregate  increase  in 
population  since  1830. 

Table  I  also  shows  that  in  1860  the  additions  to  both  roads  and  population  were 
nearly  equal  in  proportion  ;  that  is,  22.9  per  cent,  of  the  aggregate  road  in  1880  was 
built  from  1850  to  1860,  and  22.1  per  cent,  of  the  total  increase  in  population  from  1830 
to  1880  was  added  during  the  same  decade ;  also  that  during  the  ten  subsequent  years 
both  held  nearly  the  same  ratio.  From  this  state  of  affairs  it  could  have  been  pre- 
sumed that  in  1860  the  mileage  of  roads  had  been  found  nearly  sufficient  for  the  re- 
quirements of  the  population  as  it  then  existed,  and  that  additions  were  only  made 
in  proportion  to  the  increase  in  population  (the  proportions  at  the  end  of  1870  being 
about  the  same  as  in  1860),  were  it  not  for  the  intervention  of  the  war,  the  effects  of 
which  make  it  impossible  to  take  the  period  mentioned  asa  true  basis  for  judging  re- 


10  INTERSTATE    COMMERCE. 

quirements.  But  assuming  that  in  1860  28,919.79  miles  of  road,  the  aggregate  then 
built,  had  been  sufficient  for  the  31,545,321  of  people,  and  in  1870  49,168.33  miles  of 
road  for  38,558.37 1  people,  then  the  question  naturally  arises,  Why  were  these  immense 
additions  made  in  the  decade  from  1870  to  1830  ?  Either  the  mileage  in  the  previous 
decades  had  not  been  sufficient,  or  other  causes  must  have  interfered  and  caused  this 
unprecedented  construction.  In  1880  there  are  87,801.42  miles  of  road  to  50,155,783 
people,  which  is  an  increase  from  1  mile  of  road  to  784  people  in  1870  to  one  mile  of 
road  for  571  people  in  1880.  Undoubtedly  existing  necessities  for  additional  roads  in 
dome  sections  did  call  for  considerable  construction ;  but  when  each  and  all  of  the 
six  groups  are  compared,  then  construction  will  be  found  which  appears  as  not  hav- 
ing been  compulsory  or  caused  by  actual  necessities;  and  it  is  probable  that  many 
miles  were  built  with  no  expectations  of  immediate  receipts  from  traffic,  and  with  a 
view  to  future  prospects. 

During  this  period  the  average  number  of  the  population  to  1  mile  of 
road  completed  by  decades  has  been  as  follows  :  In  1840, 6,194;  in  1850, 
2,705 ;  in  1860, 1,087  ;  in  1870,  784 ;  and  in  1880,  571. 

It  is  also  shown  that  in  the  census  year  there  were  for  each  mile  of 
road  completed  in  the  United  States  23.8  square  miles  of  area,  a  popula- 
tion of  571,  and  3,243  acres  of  improved  land  ;  and  that  the  average 
value  of  products  for  each  mile  of  road  aggregated  $88,347,  distributed 
as  follows:  Farm,  $25,209;  manufactories,  $16,155;  mines,  $1,498; 
quarries,  $209 ;  petroleum  wells,  $276. 

MAGNITUDE   OF  THE   RAILWAY   SERVICE. 

Interesting  illustrations  of  the  magnitude  Of  the  railway  service  are 
given  in  the  statement  of  Mr.  Edward  Atkinson  (Testimony,  p.  318),  and 
in  the  very  complete  statistics  furnished  the  committee  by  Mr.  Henry 
V.  Poor  (Testimony,  p.  221),  and  by  Mr.  H.  E.  Hobart  (Testimony,  p.  675). 

Mr.  Atkinson  estimates  that  the  railway  property  of  the  country  con- 
stitutes one-fifth  part  of  the  accumulated  capital  of  the  country  to-day. 
There  are  650,000  people  employed  in  that  service  in  the  mere  mechan- 
ism of  the  distribution  of  products,  without  reference  to  those  employed 
in  construction.  These  railways  move  about  400,000,000  tons  a  year, 
half  of  which  is  food  and  fuel,  and  he  argues  that  the  railroad  has  re- 
duced the  struggle  for  food  and  fuel  in  greater  measure  than  any  other 
instrumentality,  because  it  has  virtually  annihilated  distance  and 
brought  the  movement  of  a  year's  supply  of  food  for  the  mechanic  in 
Massachusetts,  a  distance  of  1,000  miles,  down  to  the  measure  of  one 
day's  labor.  "  If  a  mechanic  will  give  up  one  holiday  a  year,"  he  says, 
"he  is  placed  alongside  of  the  prairie,  and  distance  is  eliminated  from 
his  condition." 

Since  Mr.  Poor  appeared  before  the  committee  and  submitted  the 
tables  printed  with  his  testimony  the  returns  of  the  companies  for  the 
year  1884  have  been  completed,  and  the  edition  of  his  "  Eailroad  Man- 
ual" reviewing  the  operations  of  that  year  has  been  published,  from 
which  the  following  liberal  extracts  are  here  reproduced  for  convenience 
of  reference,  because  they  contain  valuable  detailed  information  as  to 
the  latest  ascertained  results  of  the  business  of  the  entire  railroad  sys- 
tem of  the  United  States : 

The  railroad  statistics  of  1884. 

The  total  number  of  miles  of  railroad  in  the  United  States  at  the  close  of  1884  was 
125,379,  of  which  3,977  miles  were  constructed  during  the  year,  the  rate  of  increase 
being  3.17  per  cent.  The  number  of  miles  making  returns  of  their  share  capital 
and  funded  and  floating  debts  equaled  125,152,  against  120,552  for  1883,  the  increase 
being  4,598,  the  rate  of  increase  being  3.8  per  cent. 


INTERSTATE    COMMERCE.  !  1 

The  share  capital  of  the  mileage  in  operation  in  1884  equaled  $3,762,616,686, 
against  $3, 708,060,f;83  in  1883,  the  increase  equaling  $54,556,103,  the  rate  of  increase 
being  about  1.  4  per  cent. 

The  funded  debts  of  all  the  lines  at  the  close  of  the  year  aggregated  $3,669,115,772, 
a  sum  $168/235,858  in  excess  of  the  total  of  1883  ($3,500,879.914),  an  increase  of  nearly 
5  per  cent. 

The  other  forms  of  indebtedness  of  the  several  companies  at  the  close  of  the  year 
equaled  $244,666,596,  against  $268,925,285  for  1883,  the  decrease  being  $24,258,689. 
The  total  share  capital  and  indebtedness  of  all  kinds  of  all  the  roads  making  returns 
equaled  at  the  close  of  the  year  $7,676,399,054,  a  net  increase  in  the  year  of  $198,533,- 
272  over  the  total  of  1883  ($7,477,865,782),  the  rate  of  increase  for  the  year  being 
about  2.6  per  cent. 

The  cost  per  mile  of  all  the  roads  making  returns  as  measured  by  the  amount  of 
their  stocks  and  indebtedness  equaled  very  nearly  $61,400,  against  $61,800  for  1883. 

The  gross  earnings  or  receipts  of  all  the  lines  from  which  returns  were  received  for 
the  year  equaled  $770,684,908,  of  which  $206,790,701  were  received  from  transporta- 
tion of  passengers;  $502,869,910  from  transportation  of  freight;  $7,464,099  by  lines 
the  returns  of  which  were  so  incomplete  as  to  preclude  their  use  in  the  tables  giving 
the  general  results — the  sources  of  iucome,  amount  of  tonnage  moved,  &c. — and 
$53,749,997  from  the  transportation  of  mails  and  express  matter,  from  investments, 
and  from  the  sales  of  land  applicable  to  the  payment  of  interest  or  dividends. 
#»**#»  » 

The  gross  earnings  of  all  the  lines  for  the  year  ending  December  31,  1883,  equaled 
$823,772,924,  exceeding  those  for  1884  by  $53,088,016,  the  falling  off  for  the  year  equal- 
ing 6.4  per  cent.  The  earnings  in  1883  from  the  transportation  of  passengers  equaled 
$206,835,456;  from  freight,  $544,509,831;  from  lines  the  operation  of  which,  from  the 
incompleteness  of  their  returns,  could  not  be  included  in  these  general  tables, 
$16,660,047  ;  from  transportation  of  mail  and  express  matter,  from  investments,  and 
from  the  sale  of  lands  applicable  to  interest  or  dividends,  $57,667,590,  against  $53,749,997 
for  1884. 

The  earnings  per  mile  from  which  full  returns  were  received  in  1884  equaled  $6,663, 
against  $7,461  for  1883,  the  decrease  equaling  $798  per  mile. 

The  net  earnings  of  all  the  lines  for  1884  equaled  $268,106,258,  against  $293,367,285 
for  1883,  the  falling  off  equaling  $25,261,027,  the  rate  of  decrease  being  about  9  per 
cent. 

The  amount  of  interest  paid  in  1884  equaled  $176,694,302,  against  $173,139,064  in 
1883,  the  increase  being  $3,555,238,  the  rate  of  increase  equaling  more  than  2  per 
cent. 

The  amount  paid  in  dividends  in  1884  equaled  $93,244,835,  against  $102,052,548  in 
1883,  the  falling  off  equaling  $8,807,713,  the  rate  of  decrease  being  about  8.8  per 
cent. 

The  number  of  persons  transported  in  1884  by  all  the  lines  was  334,814,529,  against 
312,686,641  for  1883,  the  increase  for  the  year  being  22,127,888,  the  rate  of  increase 
equaling  7.8  per  cent. 

The  number  of  passengers  carried  one  mile  in  1884  equaled  8,778,581,061,  against 
8,541,309,674  for  1883,  the  increase  equaling  237,271,  persons  carried  one  mile,  the 
rate  of  increase  equaling  very  nearly  3  per  cent. 

The  distance  traveled  by  each  passenger  in  1884  equaled  26.24  miles;  in  1883, 
27.32  miles. 

The  amount  received  per  passenger  per  mile  equaled  2.356  cents  in  1884,  against 
2.422  cents  in  1883.  Had  the  passenger  rates  for  1883  been  maintained  for  1884,  the 
earnings  from  this  source  would  have  equaled  $212,617,233,  a  sum  $5,826,532  greater 
than  that  received. 

The  number  of  tons  of  freight  transported  on  our  railroads  in  1884  equaled  390,- 
074,749,  against  400,453,439  tons  in  1883,  the  falling  off  equaling  10,378,^90  tons,  the 
rate  of  decrease  being  about  2-J  per  cent.  The  value  of  the  tonnage  moved  in  1884, 
estimating  its  value  at  $25  the  ton,  equaled  $9,751,868,725. 

The  number  of  tons  transported  one  mile  in  1884  equaled  44,725,207,677,  against 
44, 064, 923,445  tons  moved  one  mile  in  1883,  the  increase  of  service  performed  for  the 
year  equaling  660,284,232  tons  moved  one  mile,  the  rate  of  increase  being  about  1$ 
per  cent. 

The  rates  per  ton  per  mile  for  1884  of  freight  transported  equaled  1.124  cents, 
against  1  236  cents  for  1883,  the  falling  off  equaling  1.12  mills  per  ton  per  mile.  Had 
the  rates  for  1883  been  maintained  for  1884,  the  earnings  from  freight  would  have  been 
$553,694,042  in  place  of  $502,869,901,  the  amount  actually  received.  Had  the  rates  of 
1883  for  the  transportation  of  passenger*  and  freights  been  maintained  for  1884  the 
gross  earnings  of  all  the  roads  would  nave  been  $827,525,371,  exceeding  by  $56,840,463 
the  amount  actually  received,  and  greater  by  $3,752,447  than  the  earnings  for  1883. 


12  INTERSTATE    COMMERCE. 

It  will  thus  be  seen  that  the  decline  in  the  earnings  for  the  past  year  was  due  wholly 
to  the  reduction  in  the  rates  charged. 

Notwithstanding  the  great  prostration  of  business  which  prevailed,  the  tonnage 
of  merchandise  distributed  in  1884  fell  very  little  short  of  that  of  188,!,  while  it  ex- 
ceeded the  tonnage  moved  in  1834  by  29.583,374  tons.  The  service  performed  in  1634 
in  the  transportation  of  freight  was  greater  than  that  performed  in  1882  by 
5.422.998,428  tons  moved  one  mile. 

The  falling  off  of  the  earnings  of  the  railroads  of  the  country  is  something  phenom- 
enal, so  far  at  least  as  their  recent  history  is  concerned.  The  total  earnings  of  all 
the  lines  in  operation  in  1677  equaled  §472,909.272;  in  1878,  $490, 103,351;  in  1879, 
$525,620,577;  in  1880,  $613,733.610;  in  1881,1701,680,962;  in  1882,  $770,209,899;  in 
1883,  $823  772.924  ;  the  increase  in  the  period  of  six  5  ears  equaling  $350,863,652  ;  the 
ratio  of  increase  for  the  same  period  being  nearly  75  per  cent.  In  four  years,  ending 
December  31,  1883,  the  increase  of  earnings  of  all  the  roads  equalled  $298,152,347,  the 
average  rate  of  increase  being  over  $75,000,000  annually.  This  vast  increase  was  due 
very  largely  to  the  enormous  expenditures  in  the  period  of  five  years  ending  with 

1883  in  the  'construction  of  railroads,  within  which  about  40,000  miles  of  line  were  con- 
structed, at  a  cash  cost  of  at  least  $1,200,000,000.   The  expenditure  was  well  distributed 
throughout  the  country,  and  gave  an  extraordinary  impulse  to  trade  and  production 
of  every  kind.     In  1884  only  about  4,000  miles  of  new  line  were  constructed,  the  cost 
of  which  did  not  exceed  $^6,000  per  mile,  and  perhaps  not  over  $15,000  per  mile,  or  a 
gross  sum  of  from  $60,000, 000  to  $75,000,000. 

From  such  a  decrease  in  an  expenditure  which  in  a  single  year,  1882,  reached 
$350,000,000,  it  was  inevitable  that  a  violent  shock  should  be  given  to  all  the  great 
intf  rests  of  the  country. 

In  a  country  like  our  own  a  check  has  frequently  all  the  effect  of  a  great  disaster. 
The  tonnage  moved  in  1883  by  the  railroads  exceeded  that  of  1882  by  40,000,000  tons. 
At  $25  to  the  ton,  the  increase  of  value  in  one  year  of  the  tonnage  moved  equalled 
$1,000,000.000.  All  the  great  interests  of  the  country  had  not  only  extended  their  op- 
erations in  like  ratio,  but  in  far  greater  ratio,  under  the  expectation  that  1884  would 
show  an  addition  of  40,000,000  tons,  having  a  value  of  $1,000,000,000,  to  that  moved 
the  previous  year.  Instead  of  an  increase  in  1884,  there  was  a  falling  oft'  of  10,000,000 
tons,  having  a  value  of  over  $250,000,000.  In  consequence,  almost  every  branch  of 
production  and  trade  was  brought  to  what  seemed  a  complete  standstill.  Such  really 
was  by  no  means  the  case.  The  volume  of  merchandise  moved  and  distributed  in 

1884  very  nearly  equalled  that  of  1883,  while  consumption  went  on  very  nearly  at  the 
rate  of  the  previous  year.    As  provision  had  been  made  for  an  increase  in  1884  equal 
to  that  of  1883,  ihe  result  was  a  complete  glut  of  every  kinds  of  products,  hardly  any 

one  of  which  could  be  sold  at  a  price  that  left  anv  satisfactory  profit  to  the  producer. 

*  »  *  *  *  *  * 

It  is  to  be  remembered  that  the  rates  of  interest  paid  by  the  railroad  companies  on 
their  bonds  equal  6,  7,  and  8  per  cent.,  7  per  cent,  being  a  very  common  rate.  These 
bonds  are  now  rapidly  falling  due.  They  will  be  replaced  by  bonds  bearing  interest 
at  the  rate  of  3^,  4,  or  5  per  cent.,  the  reduction  in  rates  inuring  wholly  to  the  bene- 
fit of  shareholders. 

The  chief  sufferers  by  the  recent  decline  of  earnings  have  been  the  great  trunk 
lines  between  Chicago  and  the  seaboard — the  decline  with  these  being  in  part  due  to 
the  large  falling  off  in  our  exports  of  breadstuffs  and  provisions— the  Union  and  Cen- 
tral Pacific,  and  the  lines  traversing  the  mining  States  and  Territories.  The  volume 
of  tonnage  of  the  Union  Pacific  has  been  well  maintained,  but  its  great  apparent 
success  for  a  time  was  dne  to  a  monopoly  of  the  business  of  its  route,  which  enabled 
it  to  charge  nearly  twice  the  average  rates  for  the  country.  That  monopoly  is  now 
well  nigh  lost,  and  with  it  the  rates  once  maintained.  The  managers  of  the^Central 
Pacific  have  destroyed  the  monopoly  it  once  enjoyed  as  a  through  route,  by  con- 
structing a  lival  line  of  their  own  in  which  their  interests  are  now  mainly  concen- 
trated. Mining,  particularly  of  gold  and  silver,  is  at  best  a  very  uucertain  business, 
and  the  railroads  built  to  accommodate  it  are  subject  to  similar  extreme  fluctuations. 

The  general  volume  of  business  in  1884  very  nearly  equalled  that  of  1883.  In  ex- 
tensive sections,  mainly  free  from  the  influences  which  have  affected  the  lines  de- 
scribed, the  earnings  in  1884  compare  favorably  with  those  for  18S3. 

The  earnings  of  the  railroads  in  the  New  England  group  in  1884  were  $58,558,913. 
against  $59,155,763  for  1883,  the  falling  off  being  only  $596,850.  The  earnings  of  the 
ten  States  comprising  the  southern  group  were  $71, 861,795  in  1884,  against  $69,844,273 
for  1883,  the  increase  for  the  year  being  $2,017,522.  The  earnings  of  the  six  great 
lines  within  i  he  territory  lying  to  the  south  and  westof  Lake  Michigan  were  in  1884 
$74,253,296,  against  $75,564,744  in  1883,  the  decrease  for  the  year  being  only  $1,211,448. 
The  number  of  tons  moved  by  these  lines  tn  1884  was  32,673.518,  against  31,663,979 
in  1883.  The  rate  per  mile  was  1.251  cents  m  1884,  against  1.308 cents  in  1883.  These 
lines  were  mainly  free  from  the  competition  which  so  disastrously  affected  many 


INTERSTATE    COMMERCE.  13 

Eastern  ones,  each  of  the  former  having  a  large  local  business  of  its  own.  With  the 
exception  of  the  class  of  roads  referred  to  in  the  preceding  paragraph,  which  embrace 
a  comparatively  limited  number  of  lires,  rates  and  business  for  1883  were  fairly 
maintained.  With  the  recovery  by  the  trunk  lines  of  their  business — a  slow  but  cer- 
tain process — which  is  not  to  be  relatively  on  the  scale  of  the  past,  our  whole  system 
will  again  assume  something  of  its  wonted  prosperity.  It  is  not  to  be  forgotten  that 
a  great  change  has  taken  place  the  world  over  in  the  abundance  of  capital  compared 
with  that  of  former  years.  The  rates  for  money,  in  this  country  at  least,  are  to  be 
very  much  less  in  the  future  than  they  have  been  in  the  past,  so  that  a  5  per  cent,  in- 
vestment will  be  looked  upon  as  quite  as  desirable  as  was  an  8  per  cent,  a  few  years  ago. 
******* 

The  cause  of  the  recent  falling  off  in  the  earnings  of  our  railways  was  a  reduction 
in  rates  equal  to  only  a  little  over  one  mill  per  ton  per  mile.  An  increase  of  net  earn- 
ings equal  to  only  one  mill  per  ton  on  the  freight  moved  by  the  New  York  Central 
would  have  added  $1,970,087  to  the  net  earnings  of  that  line.  An  additional  charge 
equal  in  the  average  to  one  mill  per  ton  per  mile  on  all  the  tonnage  transported  by 
the  railroads  of  the  country  for  1884,  would  have  added  over  $44,000,000  to  their  net 
earnings. 

It  would  seem  natural,  when  the  tide  turned,  that  the  expenditure  of  $1,200,000,000 
upon  40,000  miles  of  new  line,  in  the  period  of  five  years  ending  with  1883,  would  have 
been  followed  by  an  extraordinary  monetary  stringency  similar  to  that  which  fol- 
lowed the  great  movement  in  the  five  years  ending  with  1873,  during  which  fully 
27,000  miles  of  new  line  were  constructed.  At  the  close  of  the  five  years  ending  with 
1873,  the  condition  of  the  country  was  only  a  little  short  of  bankruptcy,  in  which  the 
banks  and  the  great  producing  and  commercial  interests  were  alike  involved.  The 
earnings  of  our  railroads  which,  in  1873,  equaled  $526,419,935,  fell  off  in  1874  to 
$520,466,016;  in  1875  to  $503, 065,505  ;  in  1876  to  $497,257,959,  and  in  1877  to  $472,909,272. 
It  was  not  until  1878  that  there  was  any  indication  of  recovery,  the  railroad  earnings 
for  that  year  being  $490,103,351,  an  increase  of  $17,194,079  from  the  previous  one,  the 
gross  amount  being  still  $36,316,584  below  those  of  1873. 

It  is  not  necessary  here  to  enter  upon  the  causes  of  the  long  period  of  depression 
which  followed  1873.  Its  most  striking  feature  was  the  lack  of  money — of  capital 
for  carrying  on  the  ordinary  operations  of  the  country.  The  most  striking  feature 
which  so  far  has  followed  the  period  ending  with  1883  has  been  the  abundance  of 
money — of  capital. 

The  railway  movement  ending  with  1873  was  a  most  exhaustive  one.  The  labor  of 
years  of  our  people  was  then  required  to  restore  the  waste  and  exhaustion  that  had 
been  suffered.  In  the  period  which  followed  1883,  in  the  face  of  a  recent  expenditure 
of  $1.200,000  on  new  lines,  capital  has  been  far  more  abundant  than  at  any  previous 
period  in  our  history,  showing  how  much  stronger  the  ground  upon  which  the  coun- 
try now  stands  than  that  upon  which  it  stood  in  the  period  following  1873.  For  the 
period  of  five  years  ending  with  1883  the  earnings  of  railroads  were  excessively  stim- 
ulated by  the  extraordinary  expenditures  that  had  been  made  upon  new  lines.  When 
this  stimulus  was  withdrawn  there  was  an  excessive  falling  off  of  earnings,  the  falling 
off  in  1884,  equaling  $52,988,016.  or  at  the  rate  of  6.5  percent.  From  1873  to  1874,  how- 
ever, the  earnings,  which  then  had  not  received  such  extraordinary  impulse,  fell  off  to 
the  extent  of  only  $5,953,919,  or  at  the  rate  of  1.1  per  cent.  The  decline  in  earnings 
from  1874  to  1875  was  $17,400,511,  on  early  threefold  greater  than  for  the  previous  year, 
showing  a  much  greater  degree  of  depression  for  1375  than  for  1874.  The  earnings  of 
the  railroads  for  1885  will  not  be  much  below  those  of  1884.  There  is  every  reason 
to  believe  that  in  1885  railway  earnings  will  reach  their  lowest  ebb,  and  that  in  1886 
they  will  show  a  decided  increase  over  those  for  the  current  year,  or  even  over  those 
for  1884. 

The  periods  preceding  and  following  1873  and  1883  have  many  similar  features,  but 
they  are  wholly  unlike  in  this,  that  in  the  period  which  preceded  1873  the  capital  of 
the  country  was  thoroughly  exhausted  in  the  construction  of  27,000  miles,  and  that 
the  losses  sustained  bad  to  be  restored  in  the  period  that  followed,  which  was  one  of 
great  commercial  and  industrial  depression  and  distress;  while  in  the  period  which 
preceded  1883  capital  steadily  increased  in  abundance  in  face  of  the  enormous  expen- 
ditures that  had  been  made,  so  that  the  period  when  it  closed,  instead  of  ending  as 
did  that  closing  in  1873  in  a  great  crisis  in  which  all  interests  were  alike  disastrously 
involved,  closed  with  a  capital  greater  in  abundance  than  when  it  was  entered  upon. 
The  evils,  if  they  can  be  called  such,  under  which  the  country  now  apparently  la- 
bors is  a  plethora,  not  an  absence,  of  capital.  The  problem  now  before  the  people  is 
not  a  restoration  of  the  waste  of  the  past,  but  some  disposition  of  its  vast  accumula- 
tions. 


14 


INTERSTATE    COMMERCE. 


Comparative  statement  showing  the  averages  per  mile  of  the  stock,  bonds,  cost,  and  earnings, 
percenfageof  expenses  to  earn  ings,  earnings  per  passenger  train-mile,  and  per  freigh  t  train- 
miJe,  andp'er  tonnage-mile,  $c.,for  18*2>  1883,  and  1884. 


1884. 

1883. 

1882. 

$38,  004 
29,317 
55,  329 
1,801 
4,  382 
6,663 
2,318 
65.  21 
1.001 
1.502 
Cents. 
2.356 
1.124 
Miles. 
26.24 
114.66 
Per  cent, 
4.51 
2.48 
3.52 

$30,  759 
28,650 
55,  461 
1,951 
5,092 
7,641 
2,762 
C3.78 
1.11 
1.56 
Cent*. 
2.422 
1.236 
Miles. 
27.32 
110.04 
Per  cent. 
4.59 
2.75 
3.68 

$30,674 
28,268 
52,  726 
1,926 
4,824 
7,377 
2,670 
63.61 
1.14 
1.59 
Cents. 
2.514 
1.236 
Miles. 
25.89 
109.  02 
Percent. 
4.40 
2.91 
3.65 

Passenger  earnings  per  passenger  train-mile  

Average  distance  per  passenger.  

Average  dintance  per  ton  

Interest  and  dividends  pei  cent,  of  stock,  bonds,  and  debt.  ............. 

The  vast  magnitude  of  the  operations  of  the  country  iu  railways,  in  the  period  of 
five  years  ending  with  1883,  is  well  shown  by  the  annexed  tabular  statement  of  the 
amount  of  the  listings  of  the  share  capital  and  bonds  of  railways  of  the  country  at 
the  New  York  Stock  Exchange  for  a  period  of  six  years  ending  with  1884.  Their 
gross  amount  for  six  years  equaled  $3,361,017,293;  for  five  years  ending  with  1883. 
$3,030,762,319.  A  portion  of  these  listings  were  the  stocks  and  bonds  of  reorganized 
companies,  such  as  the  Erie,  Wabash,  and  others,  and  were  so  far  relistings  under 
new  names  and  forms.  Estimating  the  relistings  at  $500,000,000,  the  amount  of  new 
securities  listed  in  the  five  years  equaled  $2,530,762,319,  the  average  being  over 
$500,000,000  annually.  The  listings  equaled  something  over  $60,000  to  the  mile  of 
new  lines.  In  addition,  very  large  amounts  of  securities  were  issued,  which  were  not 
listed  at  the  Stock  Exchange.  In  addition,  in  the  period  of  five  years,  large  amounts 
of  securities  of  new  lines  were  listed  at  the  Stock  Exchanges  of  Boston  and  Phila- 
delphia. It  was  inevitable  that  operations  conducted  for  years  on  such  a  colossal 
scale  should  be  followed  by  a  violent  and  excessive  reaction — a  reaction  not  caused 
by  any  want  of  capital,  but  showing  itself  in  an  almost  entire  cessation  in  the  con- 
struction of  railroads  and  in  the  creation  of  new  securities.  The  listings  up  to  Jnly  1, 
1685,  have  equaled  only  $39,515,466. 

THE  INTERNAL  COMMERCE  OF  THE  UNITED  STATES— 
ILLUSTRATIONS  OF  ITS  IMPORTANCE  AND  PROPOR- 
TIONS—THE TRAFFIC  OF  THE  TRUNK  LINES. 

It  has  beeu  shown  that  the  railroad  has  been  an  invaluable  aid  to 
commerce  of  every  description,  but  from  the  force  of  circumstances  as 
an  overland  highway  its  relations  to  inland  or  internal  commerce  are 
naturally  more  intimate  than  to  foreign  commerce.  And  as  the  pres- 
ent inquiry  is  directed  mainly  to  questions  affecting  internal  commerce, 
that  comes  properly  in  order  as  the  next  subject  for  consideration. 

It  is  deemed  proper  at  the  outset  to  call  attention  to  the  difficulty  oi 
collecting  reliable  general  statistics  as  to  the  extent  of  the  vast  inter 
nal  commerce  of  the  United  States.  In  contrast  with  the  attention 
paid  to  all  the  details  of  our  foreign  commerce,  the  failure  of  the  Gov- 
ernment to  set  in  motion  the  necessary  machinery  for  keeping  an  accu- 
rate record  of  the  growth  and  development  of  the  vastly  more  impor- 
tant internal  trade  of  the  country  is  remarkable.  The  report  of  the 
chief  of  the  Bureau  of  Statistics  for  1885  begins  with  the  explanatory 
statement  that — 

It  is  impossible  to  deal  with  the  internal  commerce  of  the  United  States  as  a  whole, 
owing  to  the  fact  that  it  is  impracticable  to  procure  statistics  expressive  of  its  total 
value  from  year  to  year,  and  also  owing  to  the  almost  infinite  variety  of  conditions 
under  which  it  presents  itself. 


INTERSTATE    COMMERCE. 


15 


This  statement  by  the  officer  especially  charged  by  law  with  tho  duty 
of  reporting  statistics  and  facts  in  regard  to  commerce  among  the  sev- 
eral States  emphasizes  the  necessity  of  further  legislation  for  the  pur- 
pose of  adding  to  the  machinery  for  collecting  such  information,  and 
also  serves  to  explain  why  this  committee,  with  the  facilities  at  its  com- 
mand much  more  limited  than  those  possessed  by  the  Bureau  of  Statis- 
tics, has  found  it  impracticable  to  make  as  satisfactory  and  comprehen- 
sive a  general  exhibit  of  the  internal  commerce  of  the  country  as  its 
importance  would  have  justified.  It  is  believed,  however,  that  so  far 
as  the  questions  of  legislation  to  be  considered  are  concerned,  the  illus- 
trations of  the  proportions  and  extent  of  our  internal  commerce  here- 
with presented,  in  connection  with  the  information  as  to  the  magnitude 
of  our  railway  service  already  submitted,  will  prove  sufficient  for  all 
practical  purposes. 

Notwithstanding  the  unfortusate  defects  in  that  part  of  the  govern- 
mental machinery  to  which  attention  has  been  called,  Mr.  Nimmo's  re- 
ports furnish  many  interesting  indications  of  the  wonderful  progress  of 
the  country  in  commercial  pursuits.  For  example,  the  following  com- 
parison between  the  material  resources  of  the  United  States  in  1850  and 
in  1880  was  presented  in  the  report  of  the  Bureau  for  1884  to  illustrate 
"  the  wonderful  development  of  the  natural  resources  of  the  country 
and  the  growth  of  our  internal  commerce": 

Material  resources  of  the  United  States  in  1850  and  in  1880. 


Resources. 

1850. 

1880. 

acres 

113  032  614 

*284  771  042 

.......       bushels 

100  485  944 

420  154  500 

Corn  produced  

do  ... 

592,  071,  104 

1  551  066  895 

Horses  on  farms  

number.. 

4,  336,  719 

10,858  111 

do 

6  385  094 

13  125  C85 

..     .        .        do 

30  354  213 

43  270  086 

Pig-  iron  produced     ....        

tons  . 

563  755 

5  146  972 

Coal  produced  

do.... 

7,  368  890 

96,  000  OOC 

Railroads  in  operation  

miles 

9,021 

121,593 

Valae  of  products  of  manufacture  

$1,  019,  106,  616 

*f  5,  369  579,  191 

*  For  the  census  year  1880. 

In  the  language  of  the  report — 

These  eloquent  facts  tell  the  unvaruiahed  story  of  our  Territorial  expansion,  the 
progress  of  our  agricultural  pursuits,  the  wonderful  development  of  our  mining  in- 
dustries, the  creation  of  highways  of  commerce  vast  in  extent  and  marvelous  in  effic- 
iency, and  of  an  advance  in  the  mechanic  arts  which,  in  accordance  with  what  ap- 
pears to  be  good  authority,  constitutes  the  United  States  the  first  manufacturing 
country  on  the  glohe. 

These  facts  also  serve  to  indicate  and  to  illustrate  the  rapid  growth  of  the  internal 
commerce  of  the  country  during  the  last  thirty  years. 


16 


INTERSTATE    COMMERCE. 


A  glimpse  at  the  ste.uly  iwivase  in  the  volume  of  the  internal  com 
raerce  of  the  United  States  by  rail  is  afforded  by  the  folio  wing  table 
and  statement  found  in  the  same  report: 

Total  number  of  tons  (of  2,000  pounds}  transported  upon  the  Xetc  York  State  canah,  the 
Xew  York  Centra]  and  Hudson  Hirer  Railroad,  the  New  York,  Lake  Erie  and  Western 
Railroad,  and  the  Pennsylrania  Railroad,  each  year  from  1868  to  1883,  inclusive. 


Year                                           New  York 

State  canals.* 

New  York 
Central  and 
II  nelson  Rive) 
Railroad.* 

New  York, 
Lake  Erie  and 
"Western 
Railroad.* 

Pennsylvania 
Railroad  Di- 
vision.! 

Tons. 
1868        6,442.225 

Tons. 
1,  846,  599 

Tons. 
3,  908,  243 

Tons. 
4,722,016 

1869        5,859,080 

2,  281,  885 

4,  312,  209 

5.  402,  991 

1870  6,173,769 

4,  122,000 

4,  852,  505 

5,  804,  051 

1871  6,467,888 

4,  532,  056 

4,  844,  208 

7,  100,  294 

1872                                     6  673  370 

4,393  965 

5,  564,  274 

8  459  535 

1873                                      6,  364  7S2 

5,  522,  724 

6,  312,  702 

9,211,231 

1674                       '        5,804,f88 

6,  114,678 

6,  364,  276 

8  626,  946 

1875              4,859,858 

6,  001,  954 

6,  239,  946 

9,  115,  368 

1876       4,1*2,129 

6,  803,  6cO 

5,  972,  818 

9,922,911 

1877     4,  955,  963 

6,351,356 

6,  182,  451 

9,  738,  295 

1878  5,171,320 

7,  695,  413 

6,  150,  568 

10,  94C,  752 

1879  5,362,372 

9,  015,  753 

8,  212,  641 

13,  684,  041 

1880                       ...                .         .                 6  457,  656 

10  533,038 

8,715  892 

15,304  788 

1881                              5,179.192 

11,591,379 

11,086  823 

18,  229  365 

1882                                  5,467,423 

11,330,393 

11,895,238 

20,360  399 

1883      .                             5,  664.  056 

10,  892,  440 

13,  610,  623 

21,674.  160 

*  From  annual  report  of  Auditor  of  Canal  Department.  State  of  New  York. 
t  From  annual  reports  of  Pennsylvania  Railroad  Company. 

From  this  table  it  appears  that  the  tonnage  transported  on  the  New  York  Central 
and  Hudson  River  Railroad  increased  from  1,846,599  tons  in  1868  to  10,89:2,440  tons  in 
1883;  that  the  tonnage  transported  on  the  New  York,  Lake  Erie  and  Western  Rail- 
road increased  from  3,908,243  tons  in  1868  to  13,610,623  tons  in  1H83 ;  and  that  the 
tonnage  transported  on  the  Pennsylvania  Railroad  increased  from  4,722,015  tons  in 
1868  to  21,674,160  tons  in  1883.  The  total  tonnage  transported  by  rail  on  these  three 
roads  increased  from  10,476,857  tons  in  1868  to  46,177,223  tons  in  1883. 

THE   TRAFFIC   OF  THE  TRUNK  LINES. 

In  this  country  the  most  active  exchange  of  products  takes  place  be- 
tween the  East  and  the  West,  or  rather  follows  those  lines  in  its  move- 
ment. For  this  reason  by  far  the  most  satisfactory  conception  of  the 
volume  and  distribution  of  the  products  of  the  country  is  obtained  from 
the  operations  of  the  great  trunk  lines  and  their  connecting  roads. 
Complete  returns  of  the  movement  of  east-bound  and  west  bound  traffic 
over  these  roads  are  made  to  the  trunk  line  commission,  and  from  the 
detailed  statistics  regarding  such  traffic  published  by  the  commission 
a  number  of  significant  statements  have  been  compiled  for  this  report, 
and  are  herewith  submitted. 


INTERSTATE    COMMERCE. 


17 


THE   EAST-BOUND   TRAFFIC   OF  THE  TRUNK   LINES. 

Statement  showing  the  number  of  tons  of  east-bound  "  dead"  freight,  and  also  the  tonnage 
of  cattle,  hogs,  and  dresstd  beef  forwarded  from  the  western  termini  of  the  trunk  lints, 
and  from  points  west  thereof,  destined  to  Neiv  York  City,  Boston,  Philadelphia,  and  Balti- 
more, during  the  periods  named,  over  the  following  roads  : 

N«w  York  Oity. — Via  New  York  Central  and  Hudson  Elver,  New  York,  Lake  Erie  and  "Western, 
Pennsylvania,  and  the  Baltimore  and  Ohio  Railroads. 

Boston.— Via  New  York  Central  and  Hudson  River,  New  York,  Lake  Erie  and  "Western,  Pennsyl- 
vania, Baltimore  and  Ohio,  and  Grand  Trunk  Railroads. 

Philadelphia Via  New  York  Central  and  Hudson  River,  New  York,  Lake  Erie  and  "Western,  Penn- 
sylvania, and  Baltimore  and  Ohio  Railroads. 

Baltimore. — Via  New  York  Central  and  Hudson  River,  Pennsylvania,  and  Baltimore  and  Ohio  Rail- 
roads. 


General 
freight. 

Cattle. 

Hogs. 

Dressed 
beef. 

1880. 
New  York  City  

3,  682,  101 

420,  855 

152,  580 

888,  296 

*30,  076 

*32,  488 

*8,  364 

1  425  473 

87  788 

30,  315 

1,  488,  376 

34  363 

33,  114 

Total  

7,  484,  246 

573,  082 

248,  497 

8,364 

1881. 
New  York  City  

3,873  608 

397  936 

131,  780 

1,822  960 

106,  303 

79,  587 

29,  718 

Philadelphia  

1,  374,  8-J9 

84,  171 

27,  404 

1  187  437 

35,  547 

30,  436 

Total    

8,  258  834 

623,  957 

269,  207 

29,  718 

1882. 
NbwYorkCity         

2  968  119 

366  489 

114,331 

t2  633 

9»9  716 

62  548 

85  833 

29  830 

886  185 

89,  694 

25,222 

f448 

673,  657 

20,  188 

28,  599 

1879 

Total  

5,  487,  687 

538,  919 

253,  985 

33,790 

1883. 
New  York  City  

2,  773,  252 

392,  096 

138,  890 

16,  365 

966  108 

88  451 

88  403 

43  711 

Philadelphia  .              

921  863 

87  905 

30  956 

8  601 

738  988 

23  249 

32  852 

4  158 

Total  

5,  400,  211 

591,  701 

291,  111 

72,  835 

1884. 
NewYorkCity  

2,320  710 

327,  986 

144,  217 

34  955 

Boston......  

810,  708 

74,  505 

141,  960 

121,015 

Philadelphia  

816,  793 

80,  572 

30,949 

12,  815 

Baltimore......  

732,  369 

24,  619 

33,  923 

4,281 

Total  

4,  680,  580 

507,682 

351,  049 

173,  066 

*  From  September  13  to  December  31. 

t  For  November  and  December  only.  Years  1880  and  1881  embrace  traffic  via  New  York  Central 
and  Hudson  River,  New  York,  Lake  Erie  and  "Western,  Pennsylvania,  and  Baltimore  and  Ohio  Rail- 
roads. Years  1882  and  1883  embrace  traffic  via  New  York  Central  and  Hudson  River,  New  York,  Lake 
Erie  and  Western,  Pennsylvania,  Baltimore  and  Ohio,  and  Grand  Trunk  Railroads. 


S.  Eep.  46 2 


18 


INTERSTATE    COMMERCE. 


ORIGIN  OF  THE  EAST-BOUND  TRAFFIC,  ACCORDING  TO  STATES. 

Statement  showing  the  tonnage  and, per  cent,  of  total  tonnage  from  points  of  origin,  classi- 
fied according  to  Slates,  of  the  east-bound  "  dead  freight "  traffic  destined  to  points  east  of 
the  western  termini  of  the  trunk  lines  during  tlie  periods  indicated. 


1880 

1882. 

1863. 

1884. 

Four  trunk  lines  .  '  Five  trunk  lines. 

Five  trunk  lines. 

Five  trunk  lines. 

Tons. 

Perct 

Tons. 

Per  ct 

Tons. 

Perct 

Tons. 

Perct. 

Wisconsin 

595,656 
592,980 
45*.  577 

49,900 
2,  808,  216 
1,  168,  681 
531,  446 
2,  109,  212 
241,  540 

300,957 
32,  626 
1,111,789 
183,  828 
22,  848 
343,  022 

5.65 
5.52 
4.31 

0.47 

26.80 
11.09 
5.04 
20.00 
2.29 

2.86 
0.31 
10.54 
1.75 
0.22 
3.25 

803,  429 
224,660 
453,  182 

43,  980 
2,  368,  978 
820,  450 
755,  641 
1,747,217 
416,  737 

642,  305 
34,954 
773,  741 
474,  124 
39,  670 
113,  844 

8.27 
2.30 
4.66 

0.45 
24.40 
8.45 
7.79 
17.99 
4.29 

6.61 
0.36 
7.96 
4.89 
0.41 
1.17 

892,  633 
295,  594 
466,979 

69,  639 
2,  575,  589 
824,  623 
700,  813 
1,  636,  388 
294,434 

672,134 
41,  935 
869,  458 
524,  852 
31,899 
168,  663 

8.87 
2.94 
4.64 

0.69 
25.59 
8.19 
6.96 
16.25 
2.93 

6.68 
0.42 
8.64 
5.21 
0.32 
1.67 

1,  022,  924 
282,  596 
466,  715 

59,  428 
2,  190,  580 
664,  975 
560,  497 
1,  472,  803 
300,  904 

614,415 
41.  237 
685,  674 
390,  217 
33,042 
120,  381 

11.48 
3.17 
5.24 

0.6& 
24.  59 
7.46 
6.90 
16.57 
3.  3S 

6.8» 
0.46 
7.70 
4.38 
0.37 
1.35 

Iowa  

Arkansas,    Texas, 
Louisiana,     and 
Indian  Territory  . 

Ohio  

South  of  Ohio  River 
"Western  Pennsyl- 

Weat  Virginia  
New  York  State  .. 
Western  Canada.. 
California 

Unknown  

Total  

10,  544,  3  08 

100.  00     9,  712,  912 

1 

100.00 

10,  065,  633 

100.  00 

8,  906,  388 

100.00 

NOTE. — This  statement  includes  for  1880  the  traffic  via  New  York  Central  and  Hudson  River, 
New  York,  Lake  Erie  and  Western,  Pennsylvania,  and  the  Baltimore  and  Ohio  Railroads,  and  for  the 
other  years  that  via  said  Roads  and  the  Grand  Trunk.  During  1881  the  total  tonnage  was  10,567.928. 
During  1884  the  Delaware,  Lacka  wanna,  and  Western  and  West  Shore  roads  carried  about  1, 120, 00ft 
tons,  which  is  not  included  in  the  above. 

EAST-BOUND  TRAFFIC  FROM   CERTAIN  WESTERN  CITIES. 

Statement  showing  the  total  number  of  tons  of  east-bound  ' '  dead  freight"  traffic  originating 
at  or  passing  through  the  cities  named  during  the  years  indicated. 


1881. 

1882. 

1883. 

1884. 

Chicago                

2,  892,  236 

2,  167,  371 

2,  337,  218 

*2,  841,  841 

Saint  Louis   -  

407,  797 

477,  949 

528,  972 

531,202 

Cincinnati  (town)  •  

165,  300 

222,  603 

196,  876 

161,  170 

Cincinnati  (from  points  beyond)t  ........... 

143,  475 

236,  269 

177,  519 

207,329 

48  568 

81,031 

63  958 

66  758 

106,  499 

120,  474 

110,  828 

127  806 

501,  371 

399,580 

177,519 

394,  821 

•  Including  traffic  from  Joliet,  Matteson,  Bloom,  Blue  Island,  and  Washington  Heights,  which  was  not 
included  in  previous  years. 

t  Except  that  originating  at  or  passing  through  Saint  Louis,  Indianapolis,  and  Louisville. 
I  Except  that  passing  through  Saint  Louis,  Chicago,  Peoria,  or  Louisville. 


INTERSTATE    COMMERCE. 


19 


THROUGH  EAST-BOUND  TONNAGE. 

Statement  showing  the  through  east-bound  tonnage,  exclusive  of  live  stock,  originating  at  or 
beyond  the  western  termini  of  the  trunk  lines  and  destined  to  the  four  Atlantic  cities  and 
the  Xew  England  States,  during  the  periods  named. 


Year. 

Total  tons  to 
the  tour  cities 
and  New  Eng- 
land. 

Proportion  to  each  city. 

New 
York. 

Boston 
and  New 
England. 

Phila- 
delphia. 

Balti- 
more. 

Total. 

1878                  

7,  318,  000 
9,138,313 
8,  477,  018 
6,  844,  809 
7,  012,  466 
6,  136,  762 

42.8 
40.3 
45.7 
43.1 
39.6 
37.8 

22.0 
27.8 
24.1 
34.2 
36.8 
37.0 

17.6 
15.6 
16.2 
12.9 
13.2 
13.3 

17.6 
16.3 
14.0 
9-8 
10.4 
11.9 

100 
100 
100 
100 
100 
100 

1880             

1881    

1882     

1883       

1884  

The  figures  for  1878  and  1881  embrace  the  four  trunk  lines  only.  The  others  embrace  the  five  trunk 
lines.  In  1884  the  Delaware,  Lackawanna  and  Western  and  the  West  Shore  carried  to  above  points 
about  846,000  tons. 

DISTRIBUTION  OF  EAST-BOUND  TRAFFIC. 

Statement  showing  distribution  of  the  east-bound  "dead  freight"  originating  at  or  beyond 
the  western  termini  of  the  trunk  lines,  the  destinations  of  the  same,  and  the  percentage  de- 
livered at  each. 


Destinations. 

1880 

1882 

1883 

1884 

New  York  City  
Philadelphia   

Tout. 
3,  682,  101 
1,  425,  473 

Perct. 
34.92 
13.52 

long. 
2,  968,  119 
886,  185 

Per  et. 
30.56 
9.13 

Tons. 
2,  773,  834 
921,  901 

Pcrct. 

27  56 
9.16 

Tons. 
2,  320,  710 
816,  793 

Perct. 
26.05 
9.  17 

Baltimore  *  

1,  488,  376 

14.12 

673,  657 

6.94 

739,  143 

7.34 

732  369 

8.22 

27  298 

0.26 

115  847 

1.19 

184  449 

1  83 

172  729 

1  94 

9  405 

0.09 

81,  943 

0.84 

86  221 

0.86 

72  953 

0  82 

43,890 

0.42 

105  732 

1.09 

136,  503 

1.36 

121  515 

1  37 

New  Hampshire  .  .  . 

58,505 

0.55 

115,  590 

1.19 

128,  161 

1.27 

121,  515 
{'     810  708 

1.37 
9  10 

Massachusetts  
Rhode  Island  
Connecticut  
New     Brunswick 
and  Nova  Scotia 

1,  702,  956 

22,  437 
179  232 

16.15 

0.21 
1.70 

1,  848,  720 

87,005 
182  518 

19.03 

0.90 
1  88 

1,  939,  462 

102,  792 
207  840 

19.27 

1.02 

2  06 

461,  023 
110,  758 
297,  570 

98,  119 
211  818 

5.18 
L24 

3.24 

1.10 
2  38 

Maryland    and 
South 

118  338 

1.12 

194,  289 

2.00 

197  656 

1  96 

298  679 

2  57 

New  York  State    .  . 
Pennsylvania  

808,  168 
611,  939 
25  779 

7.67 
5.80 
0  25 

1,  119,  343 
1,  010.  095 
32  338 

11.52 
10.40 
0  33 

1,  293,  677 
947,  923 
32  234 

12.86 
9.42 
0  32 

1,  031,  483 
870,  386 
38  621 

11.58 
9.77 
0  43 

West  Virginia    .... 

45,832 

0.43 

66,  902 
224  623 

0.69 
2.31 

64,502 
309  135 

0.64 
3.07 

62,  444 
326  195 

0.70 
3  67 

Unknown    .   . 

294  579 

2.79 

Total  

10,  544,  308 

100.00 

9,  712,  912 

100.  00 

10,  965,  633 

100.00 

8,906,388 

100.00- 

The  figures  for  1880  do  not  include  returns  from  the  Grand  Trunk.  Those  for  the  other  years  cover 
the  traffic  of  the  five  trunk  lines.  In  1884  the  Delaware,  Lackawana  and  Western  and  West  Shore 
roads  carried  about  1,120,000  tons,  which  it  is  estimated  were  distributed  as  follows :  To  Now  York 
City,  403,000;  Boston  and  New  England,  375,000;  Philadelphia,  68, 000;  New  York  State,  189,000;  New 
Jersey,  15,000;  Pennsylvania,  70,000. 


20 


INTERSTATE    COMMERCE. 


EXPORTS   CARRIED  TO   THE   SEABOARD. 


Statement  exhibiting  the  tonnage  carried  to  the  seaboard  cities  by  the  trunk  lines  under 
through  bills  of  lading  for  exportation  during  the  years  named,  and  the  percentages  of  the 
total  receipts  at  seaboard  citits,  and  of  the  total  east-bound  tonnage  of  the  trunk  lines  ex- 
ported. 


1880. 

1881. 

1882. 

1883. 

1884. 

New  York  City  

814,  878 

628,  217 

441,101 

307.  030 

Boston  

404,  719 

384,  070 

351,621 

421,795 

371,963 

Philadelphia  ..  

148,  301 

91,340 

80,  345 

91,  043 

84,974 

Baltimore  

57,  619 

33,  355 

23,  671 

41,  606 

37,  677 

Total      .  .          

I  425  517 

1,  136,  982 

896,  738 

911,  154 

801,  644 

Percentage  of  exports  to  total  receipts  at  sea- 
board cities  

18.97 

13.74 

16.34 

17.43 

17.13 

Percentage  of  exports  to  total  east-bound  traffic. 

13.52 

10.32 

9.23 

9.35 

9.00 

Proportions  of  same  exported  via  each  city. 


Year. 

Total  tons. 

£1  !B°8ton- 

Philadel- 
phia. 

Balti- 
more. 

Total. 

1880... 

1,  425,  517 

i 

57.2            28.4 

10.4 

4.0 

100.00 

1881  

1,  136,  982 

55.3            33.8 

8.0 

2.9 

100.00 

1882  

896,  738 

49.2  !          39.2 

9.0 

2.6 

100.  00 

1883                    

941  154 

41.  1             44.  8 

9.7 

4.4 

100.00 

1884  

801  644 

38.3  1          46.4 

10.6 

4.7 

100.00 

1 

The  above  statements  cover  the  traffic  of  the  four  trunk  lines  for  1880  and  1881.    For  the  other  years 
the  Grand  Trunk  is  included. 

WEST-BOUND  TRAFFIC  FROM  THE  SEABOARD. 

Statement  giving  for  a  series  of  years  the  total  number  of  tons  of  all  classes  of  west-bound 
freight  forwarded  from  the  four  Atlantic  cities  and  interior  New  England  competing 
points  by  the  New  York  Central  and  Hudson  River,  New  York,  Lake  Erie  and  Western, 
Pennsylvania,  Baltimore  and  Ohio,  and  the  Grand  Trunk  Railroads. 


Year. 

New  York 
City. 

Boston  and 
New 
England. 

Philadel- 
phia. 

Baltimore. 

Total. 

1878  

740  629 

206  527 

197  641 

130  061 

1  274  858 

1879  

831  138 

248  605 

245  961 

209  219 

1  r-34  923 

1880  

1  022,728 

309  228 

299  487 

241  641 

1  873  084 

1881         ...       .          

1  242  461 

383  466 

289  742 

215  993 

2  131  662 

1882  

1,  405,  174 

454,858 

329  803 

180*  907 

2  370  742 

1883    

1  019  490 

424  520 

268  439 

179  675 

1  892  124 

1884  

1  138  983 

366  954 

263  643 

152  612 

1  922,  192 

The  figures  given  for  1884  include  traffic  over  the  Delaware,  Lftckawanna  and  Western  and  the 
West  Shore  roads  in  addition  to  those  named  above. 


INTERSTATE    COMMERCE. 


21 


DESTINATION   OF  WEST-BOUND  TRAFFIC,   ACCORDING  TO   STATES. 

Statement  showing  the  distribution  and  per  cent,  of  tonnage  to  destination  of  traffic  originat- 
ing at  the  four  Atlantic  cities  and  the  eleven  Ketv  England  competing  points  forwarded  to 
the  West  by  the  trunk  lines  during  the  years  named,  classified  according  to  destination  by 
States. 


Distribution  by  States. 

1879. 

1880.                                 1881. 

Tons. 

Per  cent. 

Tons. 

Per  cent.       Tons. 

Per  cent. 

99,  907 
30,  705 
149,  899 

23,029 
336,  623 
84,458 
87,  985 
344,  023 
49,  125 
189,  675 
23,  657 
54,  381 
25,  092 
36,364 

6.51 
2.00 
9.77 

1.50 
21.94 
5.50 
5.73 
22.41 
3.20 
12.36 
1.54 
3.54 
1.63 
2.37 

107,  237 
38,  246 
166,  449 

22,  800 
40U,  888 
89,  976 
116,  354 
404,  659 
62,120 
292,  363 
28,  473 
68,  259 
25,  366 
49,894 

5.72 
2.08 
8.88 

1.22 
21.41 
4.81 
6.21 
21.61 
3.31 
15.61 
1.52 
3.64 
1.35 
2.68 

134,  298 
41,  878 
211,  377 

38,  210 
490,  484 
103,  573 
119,  545 
453,719 
70,  475 
268,  662 
25,649 
75  930 
30,  345 
61,  517 

6.30 
1.97 
9.92 

1.79 
23.29 
4.86 
5.61 
'  21.  28 
3.31 
12.60 
1.20 
3.56 
1.42 
2.89 

Missouri  

Arkansas,  Louisiana,  Texas,  and  In- 
dian Territory  

Indiana  ..            .        

Michigan  

Ohio  

South  of  Ohio  River  

Pennsylvania  

West  Virginia  

New  York  State  

Western  Canada  

California..............  

Total  

1,  534,  923 

100.  00 

1,873,084 

100.00 

2,  131,  662 

100.  00 

Distribution  by  States. 

1882. 

1883. 

1884. 

Tons. 

Per  cent 

Tons. 

Per  cent. 

Tons. 

Per  cent. 

Wisconsin  

195,  219 
51,  304 
252,  205 

36,  556 
581,  151 
115,  561 
135,  434 
496,  421 
71,444 
207,  982 
27,963 
92,  217 
41,452 
65,833 

8.24 
2.16 
10.64 

1.54 

24.52 
4.86 
5.71 
20.05 
3.01 
8.78 
1.18 
3.88 
1.75 
2.78 

147,  317 
38,  614 
190,  918 

25,  370 
417,  120 
99,244 
122,  022 
413,  764 
60,556 
194,  474 
28,174 
74,  538 
37,  362 
42,  651 

7.79 
2.04 
10.09 

1.34 
22.  04 
5.26 
6.45 
21.86 
3.20 
10.28 
1.50 
3.93 
1.97 
2.25 

156,092 
37,  710 
188,  955 

23,078 
446,  248 
103,  674 
127,  885 
410,  989 
54,  862 
195,  547 
28,  506 
77,  574 
31,669 
39,  403 

8.12 
1.96 
9.83 

1.20 
23.22 
5.39 
6.65 
21.38 
2.86 
10.17 
1.48 
4.04 
1.65 
2.05 

Iowa  

Arkansas,  Louisiana,  Texas,  and  In- 
dian Territory  

Illinois  

Indiana  

Mirliigfl.il                  ......... 

Ohio  

South  of  Ohio  River  

Pennsylvania   ..      .     .. 

"West  Virginia   

New  York  State  

Western  Canada  

California.....  

Total  

2,  370,  742 

•     100.  00 

1,  892,  124 

100.00 

1,  922,  192 

100.00 

This  statement  is  based  on  the  traffic  of  the  five  trunk  lines,  except  that  for  1884  it  includes  also  the 
traffic  of  the  Delaware,  Lackawanna  and  Western  and  West  Shore  roads. 

THE  COTTON  CROP  OP  THE  TTNITED  STATES. 

The  magnitude  of  the  internal  commerce  of  the  United  States  is  strik- 
ingly illustrated  by  the  statistics  of  the  leading  productions  of  the  coun- 
try, some  of  which  are  reasonably  complete  and  accurate.  As  the  cot- 
ton statistics  are  perhaps  the  most  complete  of  any,  that  product  has 
been  selected  for  this  line  of  illustration.  These  statistics  are  collected 
by  the  National  Cotton  Exchange  of  America,  of  which  Mr.  C.  H.  Par- 
ker, of  New  Orleans,  is  secretary,  and  the  returns  made  account  for  sub- 
stantially every  bale  of  cotton  produced  in  the  country.  The  estimate 
of  the  last  crop  made  a  year  ago  only  varied  from  the  actual  returns 
since  received  to  the  amount  of  20,000  bales. 

The  official  report  of  the  National  Cotton  Exchange  upon  the  cotton 
crop  of  the  United  States  for  the  year  1884-'8o  was  issued  September 


22 


INTERSTATE    COMMERCE. 


1885.     From  this  report  upon  the  last  crop  the  following  statements 
have  been  taken : 

The  American  cotton  crop  lor  1884-'S5  varied  but  little  from  that  of 
the  preceding  year.  The  movement  compares  with  the  previous  four 
years  as  follows: 


Year  ending  close  August— 

1885. 

1884. 

1883. 

1882, 

1881. 

Port  receipts  

4,  773,  541 
633,  241 
299,  383 

4,  800,  554 
591,580 
321,  066 

6,  009,  612 
641,801 
298,  243 

4,  688,  037 
489,  170 
278,  841 

5,  878^106 
508,  327 
219,  317 

Overland  to  mills  

Southern  consumption,  net  

Total  crop  

5,  706,  165 

5,  713,  200 

6,  949,  756 

5,  456,  048 

6,  605,  750 

Exports  : 
Great  Britain    

2,  425,  239 
403,  726 

2,  484,  83(5 
468,  996 

2,  885,  904 
438,  808 
15,403 
1,  383,  929 
42,  553 

2,  294,  560 
379,  915 
49,  973 
826,  627 
31,547 

2,  832,  127 
554,  069 
31,016 
1,  148,  104 
24,  030 

France  

Channel  ports  

Continent  ,.  

1,  090,  664 
28,343 

962,  749 
22,  052 

Canada,  rail  

Total  

3,  947,  972 
129,  488 
1,  437,  063 

3,  938,  633 
126,  721 
1,  537,  166 

4,  766,  597 
235.  484 
1,  759,  703 

3,  582,  622 
125,  582 
1,  677,  581 

4,  598,  346 
217,031 
1,  713,  626 

Stock  close  of  y  ear       ....         ..:  

Northern  mills'  takings  

The  takings  of  Northern  mills  were  on  an  average  27,629  bales  per 
•week,  against  26,560  bales  the  previous  year,  and  33,849  bales  the  year 
before  that.  Southern  mills  took  6,078  bales  weekly,  making  the  to- 
tal consumption  for  all  the  United  States  33,707  bales  weekly,  against 
36,088  the  previous  year. 

Tiie  following  statement  shows  the  net  receipts  of  cotton  at  United 
States  ports  for  the  last  three  years  : 

Net  receipts  of  cotton  at  United  States  ports. 


Ports. 

1884-'85. 

1683-'84. 

1882-'83. 

New  Orleans  

Bales. 
1,  529,  592 

Bales. 
1,  529,  158 

Bales. 
1,690,709 

Galveston  

463,  463 

595,  800 

863  104 

Mnhil^                              i.  .........             .           ...... 

237,  071 

244,  325 

313,  228 

Ind  i  anob;  

12,  813 

9,251 

19,  049 

Charleston  

507  802 

4°0  900 

564  289 

Savannah  

728  087 

6D5  746 

817  670 

Providence  *  

2:>,  521 

12.  723 

"Wilmington  

94,054 

91,691 

129,  805 

Norfolk  

545,  418 

581,  097 

787,  931 

Baltimore    

74  571 

54  410 

86  031 

Now  York  

99,200 

117,046 

152,  184 

Boston  

80  470 

92,  092 

191  298 

Philadelphia  

58,  175 

102,  706 

98,  850 

City  and  West  Points,  Richmond,  &c.,  not  included  at  Norfolk.  .  . 
Port  Koyal  

228,  790 
7.509 

186,  389 
11,198 

226,  344 
19,  524 

Pensacola  

23,  845 

34,  140 

•Corpus  Christ!  

91 

76 

Ura/cis  

44 

355 

Brownsville  

14 

Laivdo  

666 

1,604 

i 

."Eajjlo  Pass.  .. 

30 

11 

El  Paso    

6,145 

36,  876 

•Georgetown  &c.,  S.  C  

1,508 

New  Berne  and  Washington,  N.  C.,  not  counted  elsewhere  '  

5,907 

8,861 

Newport  News,  Va  

58,  706 

26,  373 

Portland,  Me  

2,  350 

Fomandina,  Fia  

198 

47 

Brunswick,  G»  

10.  894 

8,084 

Total  bales  

4  773  541 

4,  800,  554 

6,009  612 

*  No  longer  considered  a  port. 


INTERSTATE    COMMERCE. 
Total  exports  of  cotton  for  the  last  three  years. 


23 


Porto. 

Great 
Britain. 

France. 

i  Continent 
and 
channel. 

Total 
1883--84. 

Total 

1882-'83. 

Total 

1881-'82. 

if  e  w  Orleans         .  ............. 

Bale*. 
698  800 

Balet. 
301  651 

Bales. 
*334  917 

Balet. 
1  335  368 

Bales. 
I  451  383 

Bales. 
1  603  947 

Galveeton 

157  648 

9  619 

'77  962 

245  229 

370  791 

521  376 

Mobile  

43,  130 

700 

43  830 

57  537 

45  290 

Savannah  

179,903 

11,699 

199,256 

390,858 

359,799 

418,998 

C  harleston  

164,  211 

22,259 

153,515 

339  985 

268,  570 

369,  681 

Wilmington    

51  822 

14,040 

65  862 

47  242 

57  762 

Norfolk  

277,667 

6,375 

11,775 

295  817 

243,  381 

372,  529 

Baltimore  

118,  696 

3,087 

40,656 

162,  439 

170,664 

246,  933 

New  York 

494  208 

49,036 

231  384 

774  628 

644  096 

774  351 

Boston  

134,750 

742 

135,  492 

126,  402 

186,623 

Philadelphia  

62,223 

5,834 

68  057 

111,150 

82,675 

Port  Royal  

5,190 

2,990 

Newport  New*  

22,976 

22  976 

Portland,  Me  

2,521 



2,521 

Eastport   W« 

5  733 

5  733 

Brunswick,  Ga.                   

60,376 

40,889 

Pensacola.  Fl»  

3,674 

3,674 

C  it  v  and  "West  Point  

13,  010 

14,150 

27,160 

Total  

2,  425,  239 

403,728 

1,  090,  664 

3,  919,  629 

3,  916,  581 

4,  724,  044 

Last  year  

2  484  836 

468,996 

962,749 

Year  before  

2  885,904 

438,808 

1,  399,  332 

*  Including  7,875  bales  from  Galveston  to  Mexico;  666  bales  from  Laredo,  13,141  from  H  Paso,  and 
30  bales  from  Eagle  Pass,  Tex.,  all  to  Mexico  ;  6,316  bales  from  New  Orleans  to  Mexico— making  total 
to  Mexico  from  all  United  States  ports  by  sea  and  rail,  28,028. 

Statement  of  the  crop  based  upon  the  general  movement  to  and  from  the  seaboard. 


1884-'85.      1883-'84. 


Receipts  at  shipping  ports  

Baltt. 
4,  773,  541 
833,  241 
299,383 

Balet. 
4,  800,  554 
591,  580 
321,066 

Shipments  overland  and  direct  to  ruann 
Southern  consumption,  exclusive  of  am 

Total  crop  of  the  year,  bale*  .... 

fax'tun*™,  including  Canada  

ount  taken  from  ports    .....       .  .  ..... 

5,706,165 

5,  713,  200 

24  INTERSTATE    COMMERCE. 

Statement  exhibiting  the  overland  movement  of  the  crop. 

1884-'85.  1883-'84. 


Bale*. 
290,857 

19,772 
167,384 
139,338 
49,734 
2,027 
30,672 
41,633 
1,566 

44,643 

Bale». 
304,273 

77,364 
181,  225 
56,246 
33,485 
4,171 
61,338 
60,263 
5,479 

92,237 
4,133 
76,255 

3.407 
21,  726 

38,778 
2.952 

6,599 

—            1  ft°R  fill 

Carried  DOrth  across  Mississippi  River 

Carried  north  from  Cairo,  via  Cairo 

Carried    north    from    Cairo  via  Illi- 
nois Central  R.  R  

Carried  north  from  Evansville,  via 
Evansville  and  Terre  Hante  R.  R  .  . 
Carried  north  from  Louisville,    via 
Ohio  and  Mississippi  R.  R  
Carried    north  Louisville,  via  Jeff., 
Mad.  and  Ind.  R.  R    

Carried  north,  Louisville  via  Louis- 
ville,  Cincinnati  and  Lexington  R.  R. 
Carried  north,  Louisville  via  L.,  N.  A. 
and  Ch.  R.  R  

Shipped  across  the  Ohio   River   at 
Louisville  by  the  Chesapeake  and 
Ohio  S.  W.  R.R.,notincludedabove. 
North  from  Louisville,   &.C.,  not  in- 
cluded above            --  

Carried  north  via  Cincinnati  Southern 
R.  R             

75,477 

8,308 
56,482 

34,232 
4,258 
6,626 

Carried  across    Potomac    River   by 
Alexandria  and  Fredericksburg  R.  R 

Carried  across  Potomac  River  by  Nor- 
folk and  Western  R.  R  

Carried  north  across  Potomac  River 
by  Virginia  Midland  R.  R  

Shipped  to  mills  adjacent  to  river, 
not  included  in  above  

Less  deductions  : 
Shipped  from  Cairo  to  Saint  Louis  
Receipts   at  Cincinnati   from   New 
Orleans  by  river  

44,009 

35,117 
512 

50 

116 
402 
159 
3,296 
89  651 

Shipped  from  Saint  Louis  to  Vickg- 
burg,  Memphis  and  New  Orleans, 
by  river  and  rail  

Snipped  from  Saint  Louis  to  Louis- 
ville    

Sundry  

Cincinnati  to  Louisville  

Shipped  from  Saint  Louis  via  Norfolk 
and  Newport  News  

288 

Total  deductions  

Deduct  : 
Receipts  overland  at  New  York, 
Boston,  Philadelphia,  Providence, 
Baltimore,  &c  

028,711 
,  271,076 

989,  280 
870,630 

311,771 
160,404 

1,776 
21,133 
200 

100  MM 

Shipments  from  Mobile  and  other 
out  ports  by  rail  and  river  to  in- 
terior    .  . 

191  082 

Less  deducted  at  : 
New  Orleans....  ..............  .. 

156,060 

Savannah.  ........................ 

Norfolk  

2,384 
10,054 

Mobil*  

Other  port*...  ............. 

Direct  overland    not  elsewhere 

—  —  168,  408 

23,494 

27,170 

206,470 
-~..  .......  ...               638,141 

397,700 

691,580 

INTERSTATE    COMMERCE. 


25 


Herewith  is  given  a  statement  exhibiting  the  total  production  of  cot- 
ton in  the  United  States  for  the  last  eleven  years,  475  pounds  gross 
representing  a  statistical  bale  of  450  pounds  net : 

Production  of  cotton  for  eleven  years. 


Number 
actual  bales 

Average 
weight  per 
bale. 

Gross  weight 
crop,  pounds. 

Number 
statistical 
bales,450 
pounds  net. 

1884-'85  

5  706  165 

480  70 

2  742  966  Oil 

5  774  665- 

1883-'84  

5  713  200 

482  66 

2  757  544  42° 

5  805  357 

1882-'83  

6,  949  756 

489.  95 

3  405  070  410 

7  168  56S- 

188l-'82  

5  456,  048 

474.  38 

2  588  236  636 

5  44g  919- 

1880-'81  

6,  605,  750 

484.  40 

3  199  822  682 

6  736  46S> 

1879-'80  

5  761  252 

481.  11 

2  771  797  156 

5  835  36^ 

1878-79  

5,  074,  155 

473.  85 

2  404  410  373 

5  061  917 

1877  '78  

4,  773,  865 

473.  47 

2,  260,  285,  666 

4,  758,  49G 

1876-77  

4,  474,  069 

468.  45 

2,  095,  901  297 

4  412  424 

1875-76  

4,  632,  313 

469.  67 

2,175,678,045 

4  580  375 

1874-75  

3  827  845 

468.00 

1  790  522  656 

3  769  521 

Secretary  Parker  estimates  the  coming  crop  of  1885-'86  at  6,650,000- 
bales,  an  increase  of  944,155  bales  over  1884-'85. 

THE  RELATIONS  OF  INTERNAL  AND  EXTERNAL  COMMERCE  TO  AGRI- 
CULTURE. 

The  comparative  status  of  our  internal  and  external  commerce  in  their 
relations  to  agriculture  was  exhibited  in  a  report  issued  by  the  Depart- 
ment of  Agriculture  in  November,  1884,  in  which  Mr.  J.  E.  Dodge,  the 
statistician  of  the  Department,  says  : 

Compared  with  the  domestic  demand,  the  foreign  is  utterly  insignificant,  either 
for  agricultural  or  manufactured  products.  The  foreign  trade  has  received  a  recog- 
nition in  the  public  mind  far  beyond  its  relative  importance.  Until  recently  our 
exports  of  merchandise  failed  to  yield  money  enough  to  pay  for  imports,  and  the  pro- 
duction of  our  mines  went  to  pay  the  balance.  In  forty  years  of  the  last  half  cen- 
tury only  nine  had  a  balance  in  favor  of  imports.  In  the  last  ten,  owing  to  crop- 
failures  in  Europe  and  extension  of  crop  area  on  millions  of  acres  of  land  given  away 
to  native  and  foreign  born  citizens,  the  balance  has  favored  exports.  The  comparison 
is  as  follows : 

1835-'74,  excess  of  imports $1,579,829,806- 

1875-'84,  excess  of  exports 1,360,482,467 

Excess  of  imports  in  fifty  years 219,347,339- 

Therefore,  during  the  fifty  years  exports  were  in  debt  to  imports  $219,347,339.  So- 
we  have  failed  by  that  amount  to  produce  enough  for  home  consumption.  But  our 
deficiency  is  far  greater,  because  the  values  of  imports  are  known  to  be  understated, 
and  they  are  always  the  value  at  foreign  ports,  upon  which  the  cost  of  freights  and 
commissions  must  accrue. 

To  pay  for  this  excess  of  imports  our  gold  and  silver  must  be  used  ;  and  the  excess 
of  such  exports  over  imports  in  fifty  years  amounts  to  $1,068,561,548.  So  the  excess 
of  these  payments  over  the  apparent  indebtedness  from  excessive  imports  of  mer- 
chandise is  $849,214,209,  an  average  draft  of  $16,984,284  per  annum  for  the  entire 
period.  It  is  true  that  immigrants  bring  money  and  other  effects,  which  add  to  the- 
wealth  of  our  country,  and  far  more  than  balances  the  above  deficiency.  The  fact  re- 
mair  s,  nevertheless,  that  the  domestic  production  of  the  United  States  fails  to  equal, 
by  a  very  small  difference,  the  consumption  of  the  United  States. 

*    *     *    The  grain  supply  will  hereafter  be  in  larger  proportion  for  domestic  con- 


26  INTERSTATE    COMMERCE. 

sumption,  the  cotton  demand  will  continue  to  move  in  the  direction  >>f  larger  domestic 
manufactures,  and  the  pork  trade  will  be  in  larger  proportion  consumed  at  home. 
These  three  products,  which  almost  monopolize  the  export  trade,  have  all  been  the 
result  of  undue  stimulation,  of  a  disproportionate  distribution  of  farm  labor  and  crop 
areas,  while  other  products  needed  for  consumption  have  been  unnecessarily  scarce  and 
high.  The  excess  of  wheat-growing  has  brought  prices  to  a  ruinous  point,  when 
sound  grain  can  be  bought  in  Dakota  for  40  cents,  and  again,  in  London  for  $1  It 
is  down  close  to  India  rates. 

In  an  earlier  paper  the  same  authority  said  : 

The  domestic  trade  of  a  country  is  always  its  principal  commerce.  In  this  country 
the  foreign  trade  probably  represents  scarcely  $1  in  $20  of  the  grand  volume  of  mer- 
cantile transactions.  It  might  be  less  without  the  slightest  inconvenience  to  a  human 
being,  the  importer  alone  excepted.  With  an  area  bounded  by  the  two  great  oceans 
•of  the  globe,  and  touching  the  domain  of  everlasting  ice  on  one  side  and  that  of  trop- 
ical temperature  on  the  other,  there  is  little  need  to  go  beyond  its  boundaries  for  any- 
thing. This  continental  area  includes  a  range  of  elevation  occupied  in  agriculture 
of  7,000  feet,  giving  variety  of  climate  and  production  without  regard  to  latitude. 
North  Carolina  and  New  Hampshire  have  a  range  of  6,000  feet  and  California  still 
greater  difference  of  altitude.  North  Carolina  produces  rice  and  wheat,  figs  and  ap- 
ples, and  can  supply  both  ice  and  sugar  for  its  insiduous  yet  popular  potations  of 
peach  brandy.  The  productions  of  the  United  States  range  from  lichens  to  lemons, 
^nd  include  the  fruits  of  all  zones,  from  gooseberries  to  guavas.  With  these  resources 
•of  soil  and  sun,  of  coal  and  iron,  of  gold  and  silver,  of  water  for  transportation  and 
for  power,  of  mind  and  muscle,  of  skill  and  genius,  how  stupid  the  folly  of  desuetude, 
how  abject  the  shame  of  inanity,  how  injurious  the  crime  of  idleness.  To  go  thou- 
sands of  miles  for  that  which  we  can  produce  from  our  surplus  labor  would  be  burn- 
ing the  candle  at  both  ends  and  drifting  into  the  darkness  of  national  poverty. 

Our  population  doubled  in  twenty-seven  years  from  1853.  It  will  double  again,  it 
is  estimated  by  Professor  Elliott,  in  thirty  years,  in  1910.  Assuming  thirty-five  years 
and  forty  years  for  subsequent  duplications,  the  population  will  be  400,000,000  in  one 
hundred  years  from  the  present  date,  or  nearly  one-third  of  the  present  population  of 
the  world,  with  a  consuming  power,  there  is  reason  to  believe,  of  nearly  half  the  world. 
This  ia  the  field,  rather  than  a  foreign  one,  which  American  agriculture  is  called  to 
fill  in  production  and  distribution — a  field  broad  enough  to  satisfy  the  largest  ambi- 
tion. 

In  support  of  the  propositions  that  every  nation  must  be  practically 
self-supporting,  and  that  the  consumption  of  the  United  States  is  the 
main  stimulus  of  its  production,  and  will  be  in  the  future,  the  same 
writer  cites  the  following  facts : 

It  is  true  that  our  production  has  advanced  with  wonderful  strides.  While  popu- 
lation doubled  in  twenty-seven  years  the  wheat  area  doubled  in  fifteen ;  there  were 
four  million  farms  in  1880  and  but  two  million  in  1860.  The  maize  crop  of  one  year  is 
-equal  to  the  product  of  four  years  in  Europe.  The  supply  of  wheat  per  capita  was 
only  4.33  bushels  in  1849,  5.5  in  1859,  7.46  in  1869,  and  9.2  in  1879.  We  might  pro- 
-duce  20  bushels  per  capita,  but  it  would  be  folly  to  do  it.  The  area  in  wheat  is  now 
38,500,000  acres,  and  12,000,000  acres  are  cultivated  in  excess  of  the  wants  of  the  coun- 
try, the  produce  of  which  must  be  sold  abroad,  mainly  in  Liverpool,  in  competition 
•with  the  grain  of  Russia,  of  South  America,  of  Australia,  and  of  India.  It  is  sent 
1,500  miles  by  land  and  3,500  miles  by  sea,  and  from  California  more  than  half  round 
the  world,  to  compete  with  the  half-civilized  fellahs  of  Egypt  and  the  slavish  ryots 
of  India.  It  is  a  competition  unworthy  of  American  freemen,  luad  utterly  unnecessary, 
being  caused  by  bad  calculation  in  the  distribution  of  crop  areas,  for  while  we  export 
one-third  of  the  wheat  production  we  import  one-seventh  of  all  the  barley  consump- 
tion, and  $100,000,000  worth  of  sugar  at  foreign  valuation,  which  brings  about 
f  150,000,000  in  our  local  markets  in  addition  to  the  costs  and  profits  of  refining  here. 


INTERSTATE    COMMERCE. 


27 


In  this  country,  certainly,  the  record  of  progress  of  population  and 
production  has  reversed  the  dictum  of  Malthus,  which  states  that  pop- 
ulation increases  by  geometrical  ratio  and  production  by  arithmetical 
ratio.  While  the  population  has  doubled,  production  of  food  has  far 
more  than  doubled.  It  is  possible  until  surplus  lands  are  occupied  and 
the  limit  of  productiveness  attained  still  to  increase  the  food  supply  per 
head,  yet  the  time  will  doubtless  come  when  the  proportion  of  surplus 
will  diminish  and  population  will  tend  to  press  upon  subsistence.  Until 
that  day  arrives  there  will  be  an  excess  of  agricultural  production  which 
may  be  spared  to  eke  out  the  supplies  of  countries  less  fortunate. 

The  tendency,  however,  is  strong  in  favor  of  placing  this  surplus  in 
condensed  form,  saving  profits  of  condensing  and  cost  of  transporta 
tion.     Instead  of  corn,  or  meal  even,  beef,  pork,  lard,  butter,  and  cheese 
are  exported  ;  wheat  will  be  converted  into  flour  and  less  of  it  exported ; 
cotton  alternately  shipped  as  yarn  and  cloth. 

Asia  has  little  occasion  to  import  the  standard  food  products,  and 
could  not  pay  for  foreign  subsistence  of  her  dense  populations  ;  South 
America,  Australasia,  and  Africa  have  immense  areas  of  rich  lands  un- 
occupied, and  could  easily  double  or  quadruple  their  present  produc- 
tion. Europe  is  mainly  self-supporting;  the  eastern  half  of  it  is  only 
partially  and  crudely  subjected  to  cultivation;  the  western  half  has 
only  a  very  small  area  unable  to  sustain  its  population,  and  England 
has  unoccupied  land  enough  to  produce  every  pound  of  meat  and  bread 
that  is  now  imported.  So  the  outlook  is  not  good  for  the  United  States 
to  ship  breadstuff's  in  unlimited  quantities  throughout  the  civilized 
world,  and  the  principal  markets,  both  for  bread  and  meat,  must  hence- 
forth be  sought  at  home. 

The  influence  of  farm  machinery  on  production  has  been  very  great, 
as  is  shown  by  the  following  comparison  of  the  progress  of  twenty 
years  by  census  returns  and  supplementary  estimates  as  follows : 


Products. 

1859.                     1879. 

Corn         

bushels.. 

838,792,740         1,754,591,676 

Wheat         

do  

173,104,924            459,483,137 

Oats  

do  .. 

172,  643,  185            407,  858,  999 

Kve  

do.... 

21,  101,  380              19,  831,  595 

Barley  

do.... 

15,825.898  •            43,997,495 

.do    . 

17  571,818              11,817,327 

Hire                '  

..  .  .  ..    pounds  . 

187  167,032             110,131,373 

bushels  . 

111,  148,  867             169,  458,  539 

Sweet  potatoes  

do  

42,  095,  026              33,  378,  693 

Hay  

tons  .  . 

19,  C83,  896              35,150,711 

Cotton  

pounds  .  - 

2,  274,  372,  309         2,  77  1  ,  797,  1  56 

Tobacco  -  

do  

434,209,461             472,661,157 

Peas  and  beans  

bushels  .  . 

15,  061,  995                9,  590,  027 

O  rchard  products  *  

HODS   . 

pounds  .  . 

10,  991,  996              26,  540,  378 

tons  .  . 

74,  493                        5,  025 

Flax  

pounds.. 

4,720,145                1,565,546 

Flu  x-seed     

.busheis.. 

566,  867                7,  170,  951 

hogsheads  .  . 

230,  982                    178.  872 

Maple  sugar  ..  

pounds  .  . 
gallons  .  . 

40,  120,  205              36,  576,  061 
14,  963,  996              16,  573,  273 

do  

6,749,  123              28  444,202 

do     . 

1,597,589                1,796,048 

pounds.  . 

l,3i!-                        1,10.3,688 

do  ... 

25,  366,  357              25.  743,  208 

bushels  .  . 

900,040                1,317,701 

do.... 

956,188                1,922,  '.'--' 

Whirs  
\V,,i>l  t       

gallons.. 
pounds.  . 

1,  627,  242              20,  000,  000 
75,  000,  000            210,  681,  751 

Butter  t                                 .       ... 

do  

500,  000,  000             900,  000,  000 

do.... 

130,  000,  000            300,  000,  000 

gallons  .  . 

1,  000,  000,  000         1,  800,  000,  000 

•  As  reported  in  the  census,  not  including  an  immense  home  consumption. 

1  Census  returns  of  farms,  supplemented  by  estimates  of  ranch  and  town  production. 


28  INTERSTATE    COMMERCE. 

In  view  of  such  rapid  increase  in  production  and  the  declining  foreign 
markets  for  it,  we  are  admonished  of  the  importance  of  producing  many 
things  we  now  import,  extending  and  enriching  the  variety  of  all  needed 
supplies  of  food  products,  vegetable  oils,  medicinal  substances,  and 
vegetable  fibers,  depending  mainly  on  home  consumption,  while  re- 
sponding to  any  foreign  demand  that  may  arise  throughout  the  world, 
especially  for  extended  products  that  may  easily  bear  the  burden  of 
transportation. 

THE  POWER  OF  CONGRESS  TO  REGULATE  COMMERCE— 
A  REVIEW  OF  THE  DECLARATIONS  OF  THE  UNITED 
STATES  SUPREME  COURT  ON  THE  SUBJECT— PROPOSI- 
TIONS THAT  ARE  ESTABLISHED. 

The  Constitution  says  (article  1,  section  8)  that  "  The  Congress  shall 
have  power  *  *  *  to  regulate  commerce  with  foreign  nations,  and 
among  the  several  States,  and  with  the  Indian  tribes,"  as  well  as  the 
power  "  to  make  all  laws  which  shall  be  necessary  and  proper  for  carry- 
ing into  execution  the  foregoing  powers." 

The  language  of  the  Constitution  is  plain  and  simple,  and  leaves  very 
little  ground  for  differences  of  opinion  as  to  the  intent  and  meaning  of 
these  provisions.  But  whatever  doubts  may  have  existed  have  been 
cleared  away  by  the  United  States  Supreme  Court,  which  has  repeat- 
edly construed  every  part  of  the  commercial  clause  of  the  Constitution, 
and  has  settled  beyond  dispute  the  exclusive  power  of  Congress  to 
regulate  commerce  among  the  States. 

No  arguments  which  the  committee  could  advance  would  be  as  con- 
clusive and  authoritative  as  these  declarations  by  the  tribunal  of  last, 
resort,  and  the  important  principles  established  will  be  best  understood 
by  reproducing  such  utterances  of  the  court  as  bear  most  directly  upon 
the  subjects  of  the  present  inquiry. 

The  circumstances  which  brought  about  the  incorporation  of  the  com- 
mercial clause  serve  to  explain  the  intent  of  the  trainers  of  the  Con- 
stitution and  the  meaning  of  the  language  used.  It  is  a  well  known 
historical  fact  that  one  of  the  chief  reasons  for  the  change  from  a  con- 
federation of  States  to  a  government  by  the  people,  with  one  Union  and 
one  Constitution,  was  that  the  confederacy  was  powerless  to  raise  rev- 
enue and  to  regulate  commerce  with  foreign  nations  and  among  the 
several  States.  This  is  shown  by  the  fact  that  the  first  movement  to- 
wards an  amendment  of  the  original  Articles  of  Confederation  was  to 
give  Congress  enlarged  power  over  the  subject  of  commerce.  When 
the  convention  assembled  there  was  no  controversy  over  the  proposi- 
tion to  give  to  the  General  Government  the  control  over  commerce,  and 
the  provision  now  in  the  Constitution  was  incorporated  in  it  as  a  neces- 
sity in  the  interest  of  the  common  prosperity  of  the  people.  Referring 
to  this,  Mr.  Webster  said : 

In  the  history  of  the  times  it  was  found  that  the  great  topic,  urged  on  all  occasions 
as  showing  the  necessity  of  a  new  and  different  government,  was  the  state  of  trade 
and  commerce.  *  *  *  The  New  Jersey  resolutions  complain  that  the  regulation 
of  trade  was  in  the  power  of  the  several  States,  within  their  special  jurisdiction,  in 
such  a  degree  as  to  involve  many  difficulties  and  embarrassments ;  and  they  express 
the  earnest  opinion  that  the  sole  and  exclusive  power  of  regulating  trade  with  foreign 
States  ought  to  be  in  Congress.  «  *  •  The  entire  purpose  for  which  the  delegates 
assembled  at  Annapolis  was  to  devise  means  for  the  uniform  regulation  of  trade.  They 
found  no  means  but  in  a  general  government,  and  they  recommended  a  convention 


INTERSTATE    COMMERCE.  29 

to  accomplish  that  purpose.  Over  whatever  other  interests  of  the  country  this  Gov- 
ernment may  diffuse  its  benefits  and  its  blessings,  it  will  always  be  true,  as  matter 
of  historical  fact,  that  if  had  its  origin  in  the  necessities  of  commerce,  and  for  its  immedi- 
ate object  the  relief  of  those  necessities,  by  removing  their  causes  and  by  establishing 
a  uniform  and  steady  system. 

The  condition  of  affairs  at  that  time,  and  the  particular  reasons 
which  influenced  the  grant  of  the  power  over  commerce  to  Congress, 
cannot  be  better  expressed  than  in  the  language  of  Mr.  Justice  Marvin 
(Metropolitan  Bank  vs.  Van  Dyck,  13  Smith's  (27  tf.  Y.)  It.,  508),  as  fol- 
lows: 

There  existed  at  the  time  of  the  adoption  of  the  Constitution  thirteen  States,  and 
it  was  understood  that  this  number  would  be  increased.  Each  of  these  States  pos- 
sessed powers  common  to  all  independent  nations — of  regulating  their  own  commerce 
and  the  law  of  contracts;  of  making  money  or  declaring  what  should  constitute 
money  ;  and,  of  course,  what  should  pay  debts.  They  could  emit  bills  of  credit ; 
issue  their  own  paper  money,  and  make  it  receivable  in  payment  of  debts.  They 
could  discriminate,  in  regulating  commerce,  in  favor  of  their  own  citizens,  and  against 
the  citizens  of  other  States  or  nations.  Under  such  circumstances  it  was  obvious, 
indeed  it  was  already  proved,  that  there  could  be  no  such  thing  as  harmony  touching 
any  of  those  matters.  Most  of  the  then  States  possessed  harbors  upon  the  ocean,  and 
were  engaged  in  foreign  commerce,  and  commerce  among  themselves.  Some  of  the 
States  tried  to  agree  upon  a  system  among  themselves,  and  failed.  The  system  of 
one  State  would  nullify  the  system  of  another.  Free  importations  by  one  State  would 
render  impracticable  the  systems  of  other  States  imposing  duties  for  revenue  or  for 
the  protection  of  home  industry.  Embarrassing  and  unreasonable  regulations  touch- 
ing commerce  between  the  citizens  of  one  State  and  those  of  other  States  would  be 
made.  Each  State  might  have  a  moneyed  system  unlike  that  of  any  other  State. 
Commerce  between  the  citizens  Of  one  State  and  those  of  other  States  might  be  pro- 
hibited or  destroyed.  The  confederacy  had  no  power  to  derive  a  revenue  from  impor- 
tations, nor  had  the  States  practically  this  power,  as  they  could  never  be  able  to  agree 
on  a  common  system,  and  owing  to  their  geographical  positions  any  system  other 
than  free  trade  would  be  practically  nullified  by  the  action  of  the  other  States. 

This  state  of  things  could  not  last.  The  people  were  powerless  to  protect  their  in- 
terests. A  change  was  necessary  if  they  were  to  indulge  in  the  hopes  ture  prosperity. 
This  practically  powerless  condition  of  the  people  was  an  important,  if  not  the  most 
important,  reason  for  making  an  effort  to  devise  a  remedy ;  and  the  remedy  devised 
was  the  Constitution.  A  leading  object  of  the  Constitution  was  to  get  rid  of  all  con- 
flicting commercial  interests,  and,  as  to  commerce,  to  effect  a  union  of  all  the  peopleof 
all  the  States,  great  and  small,  and  make  them  one  people,  one  nation,  without  di- 
vided interests,  and  without  the  power,  as  States,  to  produce  divided  interests  or 
conflicts.  This  was  a  leading  idea  in  favor  of  the  Constitution,  and  to  me  it  has  al- 
ways seemed  the  most  valuable  one. 

Was  this  idea  carried  into  effect  by  the  Constitution  T  I  think  it  was,  clearly  and 
fully.  It  required  several  provisions  to  effect  the  object — some  conferring  powers  on 
the  new  Government,  others  prohibiting  the  exercise  of  certain  powers  to  the  State 
governments.  Hence  were  granted  the  powers  :  to  regulate  commerce  with  foreign 
nations,  among  the  several  States,  and  with  the  Indian  tribes ;  to  establish  uniform 
laws  on  the  subject  of  bankruptcies  throughout  the  United  States  ;  to  coin  money 
regulate  the  value  thereof,  and  of  foreign  coin,  and  fix  the  standard  of  weights  and 
measures.  The  prohibitions  upon  the  States,  in  connection  with  commerce,  are,  that 
they  shall  not  lay  duties  on  imports  and  exports,  emit  bills  of  credit,  make  anything 
but  £old  and  silver  coin  a  tender  in  payment  of  debts,  or  pass  any  law  impairing  the 
obligation  of  contracts.  These  provisions.  I  think,  accomplish  the  object  intended, 


30  INTERSTATE    COMMERCE. 

namely,  the  committing  to  Congress,  the  common  representative  and  agent  of  all  the 
people,  the  exclusive  power  to  establish  a  uniform  system  of  commerce  throughout 
the  United  States.  All  these  powers  have  a  very  important  connection  with,  and  re- 
lation to,  commerce,  over  which  the  common  Government  was  to  exercise  great,  if  not 
exclusive,  control  for  the  common  henefit  of  all  the  people  of  all  the  States. 

With  this  understanding  of  the  circumstances  which  caused  the  inser- 
tion of  the  commercial  clause  in  the  Constitution  it  is  in  order  to  con- 
sider the  nature  and  extent  of  the  powers  thereby  granted  to  Congress. 
In  this  connection  the  following  inquiries  naturally  arise:  First,  What 
commerce  is ;  second,  What  is  interstate  commerce ;  and  third,  What  is 
meant  by  the  word  "  regulate,"  or  by  regulation. 

First,  What  in  commeice? 

Webster  defines  commerce  as  "  the  exchange  of  merchandise  on  a 
large  scale  between  different  places  or  communities  ;  extended  trade  or 
traffic  ";  and  as  "social  intercourse,  the  dealings  of  one  class  in  society 
with  another."  The  meaning  of  the  word,  as  used  in  the  Constitution, 
has  been  very  carefully  and  fully  defined  by  the  court  of  last  resort  in  a 
number  of  cases.  In  the  leading  case  of  Gibbons  vs.  Ogdeu,  9  Wheaton. 
Chief  Justice  Marshall  gaye  a  definition  which  bas  since  been  closely 
followed  and  is  recognized  as  conclusive,  as  follows : 

The  subject  to  be  regulated  is  commerce ;  and  our  Constitution  being,  as  was  aptly 
said  at  the  bar,  one  of  enumeration  and  not  of  definition,  to  ascertain  the  extent  of  the 
power  it  becomes  necessary  to  settle  the  meaning  of  the  word.  The  counsel  for  the 
appellee  would  limit  it  to  traffic,  to  buying  or  selling,  or  the  interchange  of  commodi- 
ties, and  do  not  admit  that  it  comprehends  navigation.  This  would  restrict  a  general 
term,  applicable  to  many  objects,  to  one  of  its  significations.  Commerce  undoubtedly  is 
traffic  ;  but  it  is  something  more  ;  it  is  intercourse.  It  describes  the  commercial  inter- 
course between  nations  and  parts  of  nations  in  all  its  branches,  and  is  regulated  by  pre- 
scribing rules  for  carrying  on  that  intercourse.  The  mind  can  scarcely  conceive  a 
system  for  regulating  commerce  between  nations  which  shall  *  *  *  be  confined 
to  the  prescribing  rules  for  the  conduct  of  individuals  in  the  actual  employment  of 
buying  and  selling  or  barter.  *  *  *  It  has  been  truly  said  that  commerce,  as  the 
word  is  used  in  the  Constitution,  is  a  unit,  every  part  of  which  is  indicated  by  the  term. 
If  this  be  the  admitted  meaning  of  the  word  in  its  application  to  foreign  nations,  it 
must  carry  the  same  meaning  throughout  the  sentence,  and  remain  a  unit,  unless 
there  be  some  plain,  intelligible  cause  which  alters  it. 

In  the  same  case  Mr.  Justice  Johnson  added  to  the  definition  of  the 
Chief  Justice  as  follows  : 

Commerce,  in  its  simplest  signification,  means  an  exchange  of  goods  ;  but  in  the 
advancement  of  society  labor,  transportation,  intelligence,  care,  and  the  various  me- 
diums of  exchange  become  commodities,  and  enter  into  commerce  ;  the  subject,  the 
vehicle,  the  agent,  and  their  various  operations  become  the  objects  of  commercial  regula- 
tion. 

The  word  was  further  defined  by  the  same  court  in  the  Passenger 
Cases  (7  Howard,  416),  where  it  was  held  that  "  commerce  consists  in 
selling  the  superfluity;  in  purchasing  articles  of  necessity,  as  well  pro- 
ductions as  manufactures ;  in  buying  from  one  nation  and  selling  to 
another,  or  in  transporting  the  merchandise  from  the  seller  to  the  buyer 
to  gain  the  freight."  And  the  idea  that  transportation  is  an  essential 
element  of  commerce  is  still  more  plainly  stated  in  the  case  of  the 
Beading  Railroad  Company  vs.  Pennsylvania  (15  Wallace,  232),  in  which 
the  court  says : 

Beyond  all  question  the  tranfportation  of  freights  or  of  the  subjects  of  commerce  for 
the  purposes  of  exchange  or  sale  t»  a  constituent  of  commerce  itself.  Tiiis  has  never 


INTERSTATE    COMMERCE.  31 

been  doubted,  and  probably  the  transportation  of  articles  of  trade  from  on*  State  to 
another  was  the  prominent  idea  in  the  minds  of  the  framers  of  the  Constitution  when 
to  Congress  was  committed  the  power  to  regulate  commerce  among  the  several 
States.  *  *  *  It  would  be  absurd  to  suppose  that  the  transmission  of  (he  subjects 
of  trade  from  the  seller  to  the  buyer,  or  from  the  place  of  production  to  market, 
was  not  contemplated,  for  without  that  there  could  be  no  consummated  traffic  with 
foreign  nations  or  among  the  States. 

The  same  doctrine  was  expressed  by  Mr.  Justice  Field  111  the  case  of 
the  County  of  Mobile  vs.  Kim  ball,  (102  U.  S.,  691),  when,  after  reviewing 
some  of  the  notable  decisions  upon  questions  involving  the  construc- 
tion of  the  commercial  clause,  he  says : 

Perhaps  some  of  the  divergence  of  views  upon  this  question  among  former  judges 
may  have  arisen  from  not  always  bearing  in  mind  the  distinction  between  commerce 
as  strictly  denned,  and  its  local  aids  or  instruments,  or  measures  taken/  for  its  im- 
provement. Commerce  with  foreign  countries  and  among  the  States,  strictly  considered, 
consists  in  intercourse  and  traffic,  including  in  those  terms  navigation  and  the  transpor- 
tation and  transit  of  persons  and  property,  as  well  as  the  purchase,  sale,  and  exchange 
of  commodities.  For  the  regulation  of  commerce  as  thus  defined  there  can  be  only  one 
system  of  rules  applicable  alike  to  the  whole  country  ;  and  the  authority  which  can 
act  for  the  whole  country  can  alone  adopt  such  a  system.  Action  upon  it  by  separate 
States  is  not,  therefore,  permissible.  Language  affirming  the  exclusiveuess  of  the 
grant  of  power  over  commerce  as  thus  defined  may  not  be  inaccurate  when  it  would 
be  BO  applied  to  legislation  upon  subjects  which  are  merely  auxiliary  to  commerce. 

The  same  justice,  in  his  dissenting  opinion  in  Bridge  Company  vs* 
United  States  (105  U.  S.,  470),  said : 

It  must  be  borne  in  mind  that  the  power  to  regulate  commerce  with  foreign  na- 
tions and  among  the  several  States,  extends  to  such  commerce  on  land  as  well  as  to- 
that  on  navigable  waters.  There  are  highways  on  land  in  every  State  on  which  a 
far  greater  commerce,  both  interstate  and  foreign,  is  conducted  than  that  which  i» 
borne  upon  its  navigable  waters.  Congress  can  require  that  this  commerce  shall  be  as- 
free  from  unnecessary  obstruction  as  that  on  navigable  waters  connecting  two  or 
more  States  or  leading  to  the  sea.  There  is  nothing  in  the  Constitution  which  in  any 
respect  distinguishes  the  regulation  it  may  exercise  in  either  case.  Its  power,  in  all 
its  extent  and  with  all  its  limitations,  is  the  same  in  both.  The  fact  that  navigable 
waters  are  natural  highways,  and  canals  are  of  artificial  construction,  does  not  affect 
the  power.  That  is  one  of  regulation  of  interstate  aud  foreign  commerce  by  whatever 
channels  conducted. 

An  interesting  application  of  this  doctrine  was  made  by  the  court  in/ 
the  case  of  the  Pensacola  Telegraph  Company  vs.  Western  Union  Tele- 
graph Company  (96  U.  S.,  1),  in  which  it  was  held  that  the  telegraph 
was  an  instrument  of  commerce.  Keferring  to  that  decision  Mr.  Chief 
Justice  Waite  declared,  in  Telegraph  Company  vs.  Texas  (105  U.  S., 
460),  that— 

A  telegraph  company  occupies  the  same  relation  to  commerce  as  a  carrier  of  mes- 
sages that  a  railroad  company  does  as  a  carrier  of  goods.  Both  companies  are  instru- 
ments of  commerce,  and  their  buainess  is  commerce  itself.  They  do  their  transportation 
in  different  ways,  and  their  liabilities  are,  in  some  respects,  different,  but  they  are 
both  indispensable  to  those  engaged  to  any  considerable  extent  in  commercial  pur- 
suits. 

It  has  been  repeatedly  held  that  the  power  to  regulate  commerce  in- 
cludes the  regulation  of  the  transportation  of  persons  and  property  upon 
the  high  seas,  the  lakes,  the  rivers,  or  upon  railroads  or  other  artificial 


32  INTERSTATE    COMMERCE. 

channels  of  communication.     As  was  said  by  Mr.  Justice  Cartis  in 
Cooley  vs.  Board  of  Wardens  (12  Howard,  299) : 

The  power  to  regulate  commerce  embraces  a  vast  field,  containing  not  only  many 
but  exceedingly  various  subjects  quite  unlike  in  their  nature  ;  some  imperatively  de- 
manding a  single  uniform  rule,  operating  equally  on  the  commerce  of  the  United 
States  in  every  part,  and  some,  like  the  subject  now  in  question  [which  was  pilotage], 
as  imperatively  demanding  that  diversity  which  alone  can  meet  the  local  necessities 
of  navigation. 

From  the  judicial  construction  of  the  word  commerce  by  the  court  of 
last  resort  it  is  apparent  that  it  has  a  very  wide  meaning  as  employed 
in  the  Constitution,  and  that  it  includes  not  only  intercourse  and  traffic 
but  as  well  the  subject-matter  of  intercourse  and  traffic,  and  also  the 
channels  through  which  and  the  agencies  by  which  such  intercourse 
and  traffic  may  be  carried  on.  The  commerce  of  a  nation  indicates  its 
life  and  power  and  the  prosperity  of  the  people.  There  is  no  commerce 
where  there  is  nothing  to  sell,  to  exchange,  or  to  transport.  In  this 
advanced  period  of  civilization  the  exchange  of  products  of  the  soil  and 
•of  manufactures  is  essential  to  the  welfare  of  the  human  race.  The 
means  of  exchange  must  be  provided,  and  every  nation  has  within  itself 
the  power  to  regulate  all  the  elements  and  agencies  that  become  neces- 
sary to  the  carrying  on  of  these  transactions. 

What  ts  interstate  commerce? 

While  the  decisions  of  the  United  States  Supreme  Court  may  not, 
perhaps,  afford  as  conclusive  an  answer  to  this  inquiry  as  to  the  pre- 
ceding one,  we  believe  that  they  indicate  very  clearly  what  the  view  of 
that  tiibuual  will  be,  when  it  is  called  upon  to  more  closely  draw  the 
line  between  that  commerce  which  is  wholly  subject  to  State  authority 
and  that  which  is  exclusively  under  the  jurisdiction  of  Congress. 
Within  but  a  few  years,  comparatively,  has  there  been  legislation  either 
by  the  States  or  by  Congress  for  the  regulation  of  inland  commerce, 
•except  as  it  has  been  carried  on  upon  the  rivers  and  lakes.  When  the 
Constitution  was  adopted  the  commerce  of  the  country  was  carried  on 
almost  entirely  upon  the  water,  either  with  foreign  nations  or  among 
the  States.  In  the  language  of  the  court,  in  21  Wallace, 470,  "commerce 
by  water  was  principally  in  the  minds  of  those  who  framed  the  Consti- 
tution." The  condition  of  affairs  has  changed  wonderfully  since  the 
adoption  of  the  Constitution.  The  nation  has  grown  from  thirteen 
to  thirty-eight  States,  with  nine  Territories  rapidly  tilling  up  with 
people.  We  are  a  nation  of  55,000,000  of  free,  intelligent  people, 
and  while  our  foreign  commerce  has  increased,  though  not  to  what  it 
ought  to  be,  yet  the  commerce  among  the  States,  the  inland  commerce 
of  the  United  States,  stretching  from  ocean  to  ocean,  has  increased  a 
thousand  fold.  The  bulk  of  the  inland  commerce  has  left  the  rivers 
and  lakes,  and  now  depends  upon  the  railroads  of  the  country. 

Internal  commerce  must  be  either  State  or  interstate.  It  has  already 
been  shown  that  the  express  purpose  and  theory  of  the  Constitution  was 
to  secure  commerce  between  the  States  against  the  possibility  of  embar- 
rassing restrictions,  discriminating  regulations,  or  a  conflict  of  authority 
between  different  States.  This  purpose  could  only  be  accomplished 
in  one  way,  and  that  was  to  make  every  transaction,  every  shipment, 
every  article  of  transport — in  short,  all  commerce — subject  to  but  one 
system  of  regulation.  With  this  in  view,  it  would  seem  that  the  only 
construction  applicable  under  all  circumstances  would  be  that  which 


INTERSTATE    COMMERCE.  33 

limits  the  authority  of  the  State  strictly  to  that  commerce  which  is 
wholly  domestic  or  internal,  and  which  gives  Congress  exclusive  con- 
trol over  the  remainder.  That  this  is  the  view  taken  by  the  Supreme 
Court  is,  we  think,  sufficiently  clear  from  its  declaration  in  Cooley  vs. 
Board  of  Wardens  (12  Howard,  299),  in  relation  to  the  power  to  regu- 
late commerce,  which  is  the  key-note  to  all  the  decisions,  that — 

Whatever  subjects  of  this  power  are  in.  their  nature  national,  or  admit  only  of  one 
uniform  system  or  plan  of  regulation,  may  justly  be  said  to  be  of  such  a  nature  as  to 
require  exclusive  legislation  by  Congress. 

This  doctrine  is  laid  down  more  fully  and  emphatically  in  County  of 
Mobile  vs.  Kimball  (102  U.  S.,  69i),  in  which  case  Mr.  Justice  Field,  in 
delivering  the  opinion  of  the  court,  said : 

The  objection  that  the  law  of  the  State,  in  authorizing  the  improvement  of  the 
harbor  of  Mobile,  trenches  npon  the  commercial  power  of  Congress,  assumes  an  ex- 
clusion of  State  authority  from  all  subjects  in  relation  to  which  that  power  may  be 
exercised,  not  warranted  by  the  adjudications  of  this  court,  notwithstanding  the 
strong  expressions  used  by  some  of  its  judges.  That  power  is  indeed  without  limita- 
tion. It  authorizes  Congress  to  prescribe  the  conditions  upon  which  commerce  in  all  its 
forms  shall  be  conducted  between  our  citizens  and  the  citizens  or  subjects  of  other 
countries,  and  between  the  citizens  of  the  several  States,  and  to  adopt  measures  to  pro- 
mote its  growth  and  insure  its  safety.  And  as  commerce  embraces  navigation,  the 
improvement  of  harbors  and  bays  along  our  coast,  and  of  navigable  rivers  within 
the  States  connecting  with  them,  falls  within  the  power. 

The  subjects,  indeed,  upon  which  Congress  can  act  under  this  power  are  of  infinite 
variety,  requiring  for  their  successful  management  different  plans  or  modes  of  treat- 
ment. Some  of  them  are  national  in  their  character,  and  admit  and  require  uniformity 
of  regulation,  affecting  alike  all  the  States ;  others  are  local,  or  mere  aids  to  com- 
merce, and  can  only  be  properly  regulated  by  provisions  adapted  to  their  special 
circumstances  and  localities.  Of  the  former  class  may  be  mentioned  all  that  portion 
of  commerce  with  foreign  nations  or  beticeen  the  States  which  consists  in  the  transpor- 
tation, purchase,  sale,  and  exchange  of  commodities.  Here  there  can  o/  necessity  be  only 
one  system  or  plan  of  regulations,  and  that  Congress  alone  can  prescribe.  Its  non- 
action  in  such  cases  with  respect  to  any  particular  commodity  or  mode  of  transportation 
is  a  declaration  of  its  purpose  that  the  commerce  in  that  commodity  or  by  that  means 
of  transportation  shall  be  free.  There  would  otherwise  be  no  security  against  con- 
flicting regulations  of  different  States,  each  discriminating  in  favor  of  its  own  prod- 
ucts and  citizens,  and  against  the  products  and  citizens  of  other  States. 

Iu  all  its  decisions  the  court  has  been  guided  by  the  definition  of  in- 
terstate commerce  so  clearly  expressed  by  Chief  Justice  Marshall  in  the 
noted  case  of  Gibbons  vs.  Ogdeu.  He  there  says: 

The  word  "among"  means  intermingled  with.  A  thing  which  is  among  others  is 
intermingled  with  them.  Commerce  among  the  States  cannot  stop  at  the  boundary  line  of 
each  State,  but  may  be  introduced  into  the  interior.  It  is  not  intended  to  say  that  these 
words  comprehend  that  commerce  which  is  completely  internal,  which  is  carried  on 
between  man  and  man  in  a  State,  or  between  different  parts  of  the  same  State,  and 
which  does  not  extend  to  or  affect  otht r  States.  Such  a  power  would  be  inconvenient, 
and  is  certainly  unnecessary.  Comprehensive  as  the  word  "  among"  is,  it  may  very 
properly  be  restricted  to  that  commerce  which  concerns  more  States  than  one. 

»»••»»» 

But  in  regulating  commerce  with  foreign  nations  the  power  of  Congress  does  not 

stop  at  the  jurisdictional  lines  of  the  several  States.     It  would  be  a  very  useless  power 

if  it  could  not  pass  those  lints.     The  commerce  of  the  United  States   with  foreign 

nations  is  that  of  the  whole  United  States.     Every  district  has  the  right  to  partici- 

S.  Eep.  46 3 


34  INTERSTATE    COMMERCE. 

pate  in  it.  The  deep  streams,  which  penetrate  our  country  in  every  direction,  pass 
through  the  interior  of  almost  every  State  in  the  Union,  and  furnish  the  means  of 
exercising  that  right.  If  Congress  has  the  power  to  regulate  it,  that  power  must  be 
exercised  wherever  the  subject  exists.  If  it  exists  within  the  States,  if  a  foreign  voyage 
may  commence  or  terminate  at  a  port  within  a  State,  then  the  power  of  Congress 
may  be  exercised  within  a  State.  This  principle  is,  if  possible,  stilt  more  clear  when  ap- 
plied to  commerce  "  among  the  several  States."  *  *  *  The  power  of  Congress,  then, 
whatever  it  may  be,  must  be  exercised  within  the  territorial  jurisdiction  of  the  several 
States. 

In  a  late  case  (Tiernan  vs.  Rinker,  102  U.  S.,  123),  referring  to  its  de- 
cision in  Welton  vs.  Missouri  (91  U.  S.,  275),  the  court  said : 

The  court,  therefore,  held  that  the  commercial  power  of  the  Federal  Government 
over  a  commodity  continued  until  the  commodity  had  ceased  to  be  the  subject  of  dis- 
criminating legislation  in  any  State  by  reason  of  its  foreign  character,  and  that  this 
power  protects  it  after  it  has  entered  the  State  from  any  burdens  imposed  by  reason  of 
its  foreign  origin.  The  court  also  held  that  the  inaction  of  Congress  to  prescribe  any 
specific  rules  to  govern  interstate  commerce,  when  considered  with  reference  to  its  leg- 
islation with  respect  to  foreign  commerce,  is  equivalent  to  a  declaration  that  inter- 
state commerce  shall  be  free  and  untrammeled,  and  that  this  policy  would  be  defeated 
by  discriminating  legislation  like  that  of  Missouri.  The  doctrine  of  this  case  has 
never  been  questioned;  it  has  been  uniformly  recognized  and  approved,  and  expresses 
now  the  settled  judgment  of  the  court. 

The  guiding  principle  of  all  these  decisions  is  shown  by  the  declara- 
tion of  the  court  ia  Henderson  vs.  Mayor  of  New  York  (92  U.  S.,  272),  in 
which  the  following  language  is  used  : 

It  is  said,  however,  that  under  the  decisions  of  this  court  there  is  a  kind  of  neutral 
ground,  especially  in  that  covered  by  the  regulation  of  commerce,  which  may  be  oc- 
cupied by  the  State,  and  its  legislation  be  valid,  so  long  as  it  interferes  with  no  act  of 
Congress  or  treaty  of  the  United  States.  Such  a  proposition  is  supported  by  the 
opinions  of  several  of  the  judges  in  the  Passenger  Cases ;  by  the  decisions  of  this  court 
in  Cooley  vs.  Board  of  Wardens,  12  Howard,  299,  and  by  the  cases  of  Crandall  vs. 
Nevada,  6  Wallace,  35,  and  Oilman  vs.  Philadelphia,  3  Wallace,  713.  But  this  doc- 
trine has  always  been  controverted  in  this  court,  and  has  seldom,  if  ever,  been  'stated 
without  dissent.  These  decisions,  however,  all  agree  that  under  the  commercial  clause 
of  the  Constitution,  or  within  its  compass,  there  are  powers  which,  from  their  nature, 
are  exclusive  in  Congress;  and  In  the  case  of  Cooley  vs.  Board  of  Wardens  it  is  said 
that  "Whatever  subjects  of  this  power  are  in  their  nature  national,  or  admit  of  one 
uniform  system  or  plan  of  regulation,  may  justly  be  said  to  be  of  such  a  nature  as  to 
require  exclusive  legislation  by  Congress." 

There  has  been  some  dispute  as  to  the  extent  to  which  the  States  may 
go  in  imposing  regulations  upon  the  instrumentalities  of  commerce 
which  may  indirectly  affect  interstate  commerce  until  Congress  sees  fit 
to  prescribe  a  uniform  plan  of  regulation.  A  notable  case  is  that  of  The 
Peoples.  The  Wabash,  Saint  Louis  and  Pacific  Eailway  Company  (105 
Illinois,  236),  in  which  this  question  was  squarely  met.  In  this  case, 
which  is  now  pending  before  the  Supreme  Court  of  the  United  States, 
the  supreme  court  of  Illinois  held  that  the  act  of  that  State,  imposing 
a  penalty  upon  railroad  companies  for  UDJust  discrimination  in  the  rates 
of  freight  charged,  was  generally  applicable  to  contracts  for  the  trans- 
portation of  goods  to  and  from  points  without  the  State,  and  its  validity 
was  sustained  on  the  ground  that  in  its  application  to  such  contracts  it  had 
reference  merely  to  inequalities  in  the  charges  made  for  the  distance 
traversed  within  the  State.  The  proceeding  was  based  upon  the  fact 


INTERSTATE    COMMERCE.  35 

that  a  greater  charge  was  made  for  transporting  freight  between  New 
York  and  Gilman  than  between  New  York  and  Peoria,  under  similar 
circumstances,  the  distance  from  Peoria  being  greater  than  from  Gilman. 
The  court  held  that  a  prima  facie  case  of  unjust  discrimination  was 
made  out,  as  it  was  not  shown  that  the  inequality  in  charge  was  all  for 
carriage  entirely  beyond  the  limits  of  the  State.  The  view  that  will  be 
taken  by  the  Supreme  Court  of  such  an  attempt  to  regulate  that  part 
of  an  interstate  shipment  which  is  within  a  State  is  indicated  in  all  the 
decisions  that  have  been  quoted,  and  quite  clearly  in  Hall  vs.  De  Cuir 
(95  U.  S.,  485),  which  involved  an  act  of  the  State  of  Louisiana  prohibiting 
discrimination  by  common  carriers  of  passengers  between  persons  of 
different  race  or  color.  By  its  terms  the  act  applied  to  carriers  engaged 
in  transporting  passengers  from  State  to  State.  It  was  declared  void 
as  an  interference  with  interstate  commerce,  even  if  construed  to  be 
limited  to  that  part  of  the  carriage  within  the  State.  Upon  this  point 
the  court  said : 

While  it  purports  only  to  control  the  carrier  when  engaged  within  the  State,  it 
must  necessarily  influence  his  conduct  to  some  extent  in  the  management  of  his  busi- 
ness throughout  his  entire  voyage.  His  disposition  of  passengers  taken  up  and  put 
down  within  tlie  State,  or  taken  up  to  he  carried  without,  cannot  but  affect  ill  a 
greater  or  less  degree  those  taken  up  without  and  brought  within,  and  sometimes  those 
taken  up  and  put  down  without.  *  *  *  It  was  to  meet  just  such  a  case  that  the 
commercial  clause  in  the  Constitution  was  adopted. 

Judge  McCrary,  of  the  United  States  circuit  court,  in  the  case  of 
Kaeiser  vs.  Illinois  Central  Eailroad  Company,  in  which  suit  was  brought 
under  the  Iowa  statute  to  recover  damages  for  overcharges  upon  freight 
shipped  from  points  in  Iowa  to  points  in  Illinois  and  Wisconsin,  used 
this  language : 

It  seems  very  obvious  that  the  regulation  of  the  transportation  of  merchandise  over 
a  line  extending,  it  may  be,  from  the  Atlantic  to  the  Pacific  Ocean,  is  a  subject  which 
is  in  its  nature  national.  It  is  so  because  it  necessarily  concerns  the  people  of  the 
whole  country,  and  is  beyond  the  legislative  power  of  any  State.  *  *  *  And 
since  no  State  law  can  have  any  extra-territorial  force,  is  it  not  clear  that  the  attempt 
to  enforce  the  statutes  of  each  of  the  several  States,  in  so  far  as  the  carriage  withiu 
snch  State  is  concerned,  would  lead  to  conflicts  and  disputes  which  no  State  authority 
would  be  competent  to  adjust  and  determine.  These  considerations,  I  think,  lead 
inevitably  to  the  conclusion,  not  only  that  such  commerce  is  the  subject  only  of  na- 
tional control  and  regulation,  but  that  any  attempt  to  devolve  upon  a  single  State 
the  power  to  regulate  it  in  part  would  necessarily  give  to  such  State  the  right  to  dis- 
criminate against  other  States  of  the  Union. 

These  same  questions  were  presented  and  considered  in  the  proceed- 
ings had  in  the  United  States  courts  of  Tennessee,  to  test  the  validity  of 
the  statute  enacted  in  that  State  for  the  regulation  of  railroads,  certain 
provisions  of  which  were  held  to  be  an  attempt  to  regulate  interstate 
transportation.  In  these  cases  Judge  Hammond  reviewed  at  length  the 
decisions  of  the  Supreme  Court  bearing  upon  the  question  of  the  limit 
of  a  State's  authority.  Eeferring  to  the  Granger  Cases,  he  said : 

The  decisions  amount,  we  think,  only  to  this:  Where  a  warehouseman  or  common 
carrier  is  engaged  in  the  storage  of  goods  or  their  carriage  within  a  State,  and  ex- 
clusively within  it,  the  rates  of  charges  for  such  business  are  subject  to  legislative 
control  by  the  State,  and  the  fact  that  such  legislation  may  indirectly  and  remotely 
affect  commerce  between  the  States  does  not  invalidate  it ;  because,  if  Congress  has, 
by  reason  of  this  indirect  and  remote  relation  of  such  local  business  to  interstate  com- 
merce, any  right  to  assert  control  over  what  is  primarily  domestic  commerce,  only  it 


36  INTERSTATE    COMMERCE. 

is  to  be  presumed,  until  Congress  acts,  that  it  does  not  intend  to  displace  the  right  of 
the  State  to  control  its  domestic  commerce. 

It  was  to  obviate  the  necessity  for  making  commercial  treaties  *  *  *  and  to 
avoid  the  danger,  confusion,  and  disaster  certain  to  result  to  commerce  between  the 
States  from  this  power  of  sovereign  States  over  that  commerce  that  the  exclusive 
power  was  conferred  upon  the  Federal  Government  "  to  regulate  commerce  with  for- 
eign nations,  and  among  the  several  States,  aud  with  the  Indian  tribes."  *  *  * 
This  operates  as  a  necessary,  wise,  and  self-imposed  limitation  upon  the  otherwise 
sovereign  power  of  the  States  over  the  subject.  It  is  not  a  police  power  in  any 
proper  sense,  and  in  our  judgment  much  confusion  has  arisen  by  so  treating  it  in  the 
struggle  to  find  some  method  of  evading  the  Federal  compact  to  surrender  it.  It  be- 
longs, it  may  be,  to  that  immense  and  almost  illimitable  residuum  of  governmental 
power  which  has  not  been  technically  classified ;  but  if  it  has  been,  there  is  no  better 
name  for  it  than  that  by  which  it  is  known  among  all  nations— the  commercial  power, 
or,  as  it  is  called  in  the  Constitution  itself,  the  power  to  regulate  commerce. 

If  the  interchange  or  intercourse  be  "within  the  State,"  it  is  properly  called  do- 
mestic commerce ;  if  from  one  to  another,  international,  or,  as  in  our  Union,  interstate 
commerce ;  and  the  Government  may,  and  often  does,  where  it  can  control  at  all, 
nnder  this  power  "to regulate  commerce,"  control  the  instrumentalities  of  that  com- 
merce. There  are,  to  be  sure,  certain  limitations  on  the  power,  as  on  all  its  other 
powers,  arising  out  of  the  laws  of  private  right  and  private  property  ;  but  it  is  too  late 
now  to  deny,  in  view  of  these  decisions  of  the  Supreme  Court,  that  charges  for  trans- 
portation are  a  matter  of  public  concern,  the  private  property  engaged  being  dedi- 
cated, so  to  speak,  to  a  public  use,  and  the  Government  may  therefore  exercise  cer- 
tain legislative  control  of  these  charges.  But  non  constal  that  the  States  may,  under 
oursystem  of  government,  exercise  it.  If  it  be  domestic  transportation,  wholly  within 
the  State,  they  may;  nor  does  it  cease  to  be  wholly  within  because  the  thing  trans- 
ported has  come  from  without,  nor  because  it  may  be  destined  to  go,  ultimately,  beyond 
the  State ;  but  the  particular  transportation  for  which  the  charge  is  made  must  be 
wholly  within  the  State.  If  it  be  partly  within  and  partly  without,  the  State  cannot 
regulate  that  within  and  leave  the  Federal  power  to  act  on  that  without,  but  has  no 
control  whatever  over  the  charges  for  such  transportation.  It  is  in  the  very  nature 
of  the  thing  itself  not  local  or  of  domestic  concern,  and  the  States  have  no  more 
power  by  such  a  construction  or  characterization  to  regulate  the  rates  by  the  uniform 
legislation  suggested  by  the  section  of  the  act  just  quoted  than  they  have  to  so  reg- 
nlate  the  rates  of  postage  or  the  weights  of  coins. 

The  definition  of  interstate  commerce  *  *  *  is  fixed,  whether  Congress  has  acted 
or  not,  and  the  real  question,  as  to  the  States,  always  is  twofold — does  the  proposed 
law  act  upon  the  commerce  itself,  or  does  it  act  only  on  the  instrumentality  ?  If  the 
first,  it  is  always  void ;  if  the  second,  its  validity  depends  on  the  circumstances. 

In  concluding  bis  review  of  the  leading  decisions  of  the  Supreme 
Court,  Judge  Hammond  said : 

The  whole  list,  from  Gibbons  vs.  Ogden,  9  Wheatou,  1,  and  Brown  vs.  Maryland,  12 
Wheaton,  419,  to  the  latest,  point  with  reasonable  certainty  to  the  line  between  valid 
ancl  invalid  legislation  by  the  States.  The  Granger  Cases  must  take  their  places  in 
this  line  and  conform  to  it,  for  there  is  not  the  least  indication  of  any  purpose  to  over- 
rule the  other  cases,  and  an  abundant  manifestation  in  subsequent  cases  of  adherence 
to  them.  They  show  that  the  States  may  tax,  inspect,  police,  and  in  other  abnndant 
•ways  by  the  exercise  of  any  kind  of  power  they  possess,  regulate  the  agencies  and  in- 
strumentalities of  interstate  commerce ;  they  may  dig  canals,  build  railroads,  im- 
prove rivers  and  harbors,  establish  ferries,  build  wharves,  construct  dams  and  bridges, 
and  control  pilotage  ;  or  they  may  authorize  persons  and  corporations  to  do  all  these 
things,  and  regulate  them  after  they  are  constructed  or  established ;  but  neither  in 
tneir  taxation,  their  inspection,  their  policing,  nor  other  exercise  of  power  can  they 
by  their  regulations  act  directly  on  the  commerce,  as  these  cases  define  it,  between 
the  States.  As  to  that,  until  Congress  acts,  the  commerce  must  be  free. 


INTERSTATE    COMMERCE.  37 

In  Moran  vs.  New  Orleans  (112  U.  S.,  69),  a  municipal  ordinance  of 
the  city  of  New  Orleans  to  establish  the  rate  of  license  for  professions, 
callings,  and  business  avocations,  which  directed  a  tax  to  be  collected 
from  persons  running  tow-boats  to  and  from  the  Gulf  of  Mexico  and 
New  Orleans,  was  held  to  be  a  regulation  of  commerce  among  the  States 
and  unconstitutional. 

If  any  further  evidence  of  the  views  of  the  court  be  needed  it  can  be 
found  in  one  of  its  latest  decisions,  in  the  case  of  Gloucester  Ferry  Com- 
pany vs.  Pennsylvania  (114  U.  S.,  196),  decided  April  13,  1885.  The 
proceedings  resulted  from  an  attempt  by  the  State  of  Pennsylvania 
to  collect  taxes  upon  the  capital  stock  of  the  company,  which  was  in- 
corporated in  New  Jersey,  and  operated  a  ierry  across  the  Delaware 
Eiver  between  Gloucester,  in  New  Jersey,  and  Philadelphia.  In  deliv- 
ering the  opinion  of  the  court  Mr.  Justice  Field  said  : 

Transportation  implies  the  taking  up  of  persons  or  property  at  some  point  and 
putting  them  down  at  another.  A  tax,  therefore,  upon  such  receiving  and  landing  of 
passengers  and  freight  is  a  tax  upon  their  transportation ;  that  is,  npon  the  commeKie 
between  the  two  States  involved  in  such  transportation.  It  matters  not  that  the  trans- 
portation is  made  in  ferry-boats  which  pass  between  the  States  every  hour  of  the  day. 
The  means  of  transportation  of  persons  and  freight  between  the  States  does  not  change 
the  character  of  the  business  as  one  of  commerce,  nor  does  the  time  within  which  the 
distance  between  the  States  may  be  traversed.  Commerce  among  the  States  consists  of 
intercourse  and  traffic  between  their  citizens,  and  includes  the  transportation  of  persons 
and  property  and  the  navigation  of  public  waters  for  that  purpose,  as  well  as  the 
purchase,  sale,  and  exchange  of  commodities.  The  power  to  regulate  that  commerce, 
as  well  as  commerce  with  foreign  nations,  vested  in  Congress,  is  the  power  to  pre- 
scribe *he  rules  by  which  it  shall  be  governed,  that  is,  the  conditions  upon  which  it  shall 
be  conducted ;  to  determine  when  it  shall  be  free  and  when  it  shall  be  subject  to  duties 
or  other  exactions.  The  power  also  embraces  within  its  control  all  the  instrumentali- 
ties by  which  that  commerce  may  be  carried  on,  and  the  means  by  which  it  may  be 
aided  and  encouraged.  The  subjects,  therefore,  upon  which  the  power  may  be  exerted 
are  of  infinite  variety.  While  with  reference  to  some  of  them,  which  are  local  and  lim- 
ited in  their  nature  or  sphere  of  operation,  the  States  may  prescribe  regulations  until 
Congress  intervenes  and  assumes  control  of  them,  yet,  when  they  are  national  in  their 
character  and  require  uniformity  of  regulation  affecting  alike  all  the  States,  the 
power  of  Congress  is  exclusive.  Necessarily  that  power  alone  can  prescribe  regula- 
tions which  are  to  govern  the  whole  country/  And  it  needs  no  argument  to  show 
that  the  commerce  with  foreign  nations  and  between  the  States,  which  consists  in  the 
transportation  of  persons  andproperti/  between  them,  is  a  subject  of  national  character  and 
requires  uniformity  of  regulation.  Congress  alone,  therefore,  can  deal  with  such 
transportation ;  its  non-action  is  a  declaration  that  it  shall  remain  free  from  burdens 
imposed  by  State  legislation.  *  *  The  grant  of  power  is  general  in  its  terms, 
making  no  reference  to  the  agencies  by  which  commerce  may  be  carried  on.  It  in- 
cludes commerce  by  whomsoever  conducted,  whether  by  individuals  or  by  corpora- 
tions. 

And  what  could  be  more  explicit  than  the  declarations  of  the  court  in 
the  case  of  Brown  vs.  Houston  (11.4  U.  S.,  622),  decided  May  4,  1885  I 
Speaking  for  an  unanimous  bench,  Mr.  Justice  Bradley  said : 

The  power  to  regulate  commerce  among  the  several  States  is  granted  to  Congress 
in  terms  as  absolute  as  is  the  power  to  regulate  commerce  with  foreign  nations.  If 
not  in  all  respects  an  exclusive  power ;  if,  in  the  absence  of  Congressional  action, 
the  States  may  continue  to  regulate  matters  of  local  interest  only  incidentally  affect- 
ing foreign  and  interstate  commerce,  such  as  pilots,  wharves,  harbors,  roads,  bridges, 
tolls,  freights,  &c.,  still,  according  to  the  rule  laid  down  in  Cooley  vs.  Board  of  War- 


38  INTERSTATE    COMMERCE. 

dens  of  Philadelphia,  12  Howard,  299, 319,  the  power  of  Congress  is  exclusive  whenever 
the  matter  is  national  in  its  character  or  admits  of  one  uniform  system  or  plan  of  reg- 
ulation ;  and  is  certainly  so  far  exclusive  that  no  State  has  power  to  make  any  law 
or  regulation  which  will  affect  the  free  and  unrestrained  intercourse  and  trade  be- 
tween the  States,  as  Congress  has  left  it,  or  which  will  impose  any  discriminating 
burden  or  tax  upon  the  citizens  or  products  of  other  States  coming  or  brought  within 
its  jurisdiction.  *  *  *  So  long  as  Congress  does  not  pass  any  law  to  regulate  com- 
merce among  the  several  States  it  thereby  indicates  its  will  that  that  commerce  shall 
be  free  and  untrammeled,  and  any  regulation  of  the  subject  by  the  States  is  repug- 
nant to  such  freedom.  This  has  frequently  been  laid  down  as  law  in  the  judgments 
of  this  court.  *  *  *  In  short,  it  may  be  laid  dowu  as  the  settled  doctrine  of  this 
court  at  this  day  that  a  State  can  no  more  regulate  or  impede  commerce  among  the 
several  States  than  it  can  regulate  or  impede  commerce  with  foreign  nations. 

These  two  decisions,  it  will  be  observed,  have  been  delivered  since 
the  last  session  of  Congress,  at  which  the  question  of  regulating  inter- 
state commerce  was  prominently  under  consideration. 
What  is  meant  by  regulation. 

The  decisions  already  quoted  indicate  very  plainly  the  meaning  given 
by  the  Supreme  Court  to  the  word  "regulate,"  as  used  in  the  Constitu- 
tion. They  show  that  regulation  has  almost  as  wide  and  varied  a  mean- 
ing as  commerce.  In  its  ordinary  signification  it  means  the  prescribing 
of  rules  for  the  carrying  on  of  commerce,  including  both  transportation 
and  traffic,  but  it  is  not  limited  to  that.  The  power  to  regulate  not  only 
carries  with  it  the  power  to  prevent  the  obstruction  of  commerce,  but 
also  to  facilitate  it  by  whatever  meaus  will  best  answer  the  purpose. 
As  was  said  by  the  Supreme  Court  in  Mobile  vs.  Kimball — 

That  power  is  indeed  without  limitation.  It  authorizes  Congress  to  prescribe  the 
conditions  upon  which  commerce,  in  all  its  forms,  shall  be  conducted,  *  *  •  and 
to  adopt  measures  to  promote  its  growth  and  insure  its  safety. 

This  power  has  been  freely  exercised  by  Congress,  although  hereto- 
fore it  has  been  used  mainly  for  the  government  of  commerce  upon  the 
•water.  Under  this  power  light-houses,  beacons,  buoys,  and  public 
piers  have  been  established,  and  there  have  been  numerous  statutes 
enacted  for  the  regulation  of  shipping,  while  millions  upon  millions  of 
dollars  have  been  expended  in  improving  rivers  and  harbors  under  the 
same  power. 

And  in  two  instances  Congress  has,  without  question,  exercised  the 
same  power  by  enacting  statutes  applying  directly  to  the  management 
of  railroads  engaged  in  interstate  transportation. 

The  first  act  of  this  character  was  that  of  July  15, 1866,  which  author- 
ized railroads  chartered  by  the  States  to  carry  passengers  and  freights 
from  State  to  State,  and  to  receive  compensation  therefor,  and  to  con- 
nect with  roads  of  other  States  so  as  to  form  continuous  lines. 

The  second  was  that  of  October  1,  1873,  which  prohibited  railways 
forming  part  of  an  interstate  line  and  vessels  transporting  cattle,  sheep, 
swine,  or  other  animals  from  State  to  State,  from  confining  the  same  in 
cars,  boats,  or  vessels  for  more  than  twenty-eight  hours  consecutively, 
without  unloading  the  same  for  water,  rest,  and  feeding,  for  at  least  five 
consecutive  hours. 

The  decisions  to  which  reference  has  been  made  conclusively  estab- 
lish, in  the  judgment  of  the  committee,  the  following  propositions  as  to 
the  power  of  Congress,  under  the  commercial  clause  of  the  Constitu- 
tion, to  regulate  all  railroads  engaged  in  interstate  commerce  within  the 
United  States : 


INTERSTATE    COMMERCE.  39 

(1)  Commerce,  in  the  meaning  of  the  Constitution,  includes  the  trans- 
portation of  persons  and  property  from  place  to  place  by  railroad. 

(2)  Commerce  among  the  States  includes  the  transportation  of  persons 
and  property  from  a  place  in  one  State  to  a  place  in  another  State.    Inter- 
state commerce  is  all  commerce  that  concerns  more  States  than  one,  and  em- 
braces all  transportation  which  begins  in  one  State  and  ends  in  or  passes 
through  another  State. 

(3)  The  power  to  regulate  such  commerce  is  vested  exclusively  in  Congress 
without  any  limitations  as  to  the  measures  to  be  adopted  or  the  means  to  be 
employed  in  its  discretion  for  the  public  welfare. 

(4)  The  States  being  without  power  to  regulate  interstate  transportation, 
the  people  must  look  to  Congress  alone  for  whatever  regulation  may  be  nec- 
essary as  t<>  interstate  commerce. 

THE   LEGAL,   STATUS  OF   THE   COMMON   CARRIER. 

Having  considered  the  judicial  construction  given  to  commerce,  State 
and  interstate,  and  to  the  power  to  regulate  such  commerce,  it  is  proper 
to  refer  briefly  to  the  legal  status  of  the  railroads,  the  medium  through 
which  by  far  the  greater  portion  of  the  inland  commerce  is  carried  on. 
Railroads  are  everywhere  recognized  as  common  carriers.  They  are  so 
treated  by  the  courts,  and  are  held  liable  for  the  performance  of  such 
duties  as  devolve  upon  common  carriers  under  the  law.  In  his  work  on 
"Common  Carriers"  Chitty  says: 

The  common  carrier  is  defined  to  be  one  who  by  the  ancient  law  held,  as  it  were,  a 
public  office,  and  was  bound  to  the  public,  and  who  to  become  liable  as  a  common 
carrier  must  exercise  the  business  of  carrying  as  a  public  employment  and  must  under- 
take to  carry  goods  for  all  persons  indiscriminately,  and  hold  himself  out  as  ready  to 
engage  in  the  transportation  of  goods  for  hire  as  a  business  and  not  as  a  casual  occu- 
pation. 

Justice  Story  defines  a  common  carrier  as  one  who  undertakes  for 
hire  or  reward  to  transport  the  goods  of  such  as  choose  to  employ  him 
from  place  to  place.  Chitty,  Kent,  Story,  and  the  law  writers  generally 
have  given  substantially  the  same  definition  of  what  constitutes  a  com- 
mon carrier.  A  common  carrier  may  be  a  person  engaged  in  transport- 
ing the  goods  of  such  persons  as  choose  to  employ  him  by  the  use  of  a 
wagon,  stage-coach,  canal-boat  or  other  vessel  on  the  lake  or  high  seas, 
or  by  operating  a  railroad. 

Hence  it  was  decided  that  the  lighterman  who  carried  goods  between 
wharves  and  ships  for  any  person  who  chose  to  employ  him  was  a  com- 
mon carrier.  He  who  holds  himself  out  to  the  world  as  prepared  to 
carry  all  goods  brought  to  him  must  be  ready  and  able  to  perform  all 
that  he  advertises  to  do.  He  must  at  least  be  prepared  to  do  all  that 
he  could  reasonably  be  expected  to  do,  and  to  perform  the  service  in  a 
safe  and  suitable  manner.  A  common  carrier  must  be  able  to  carry  for 
all  alike,  and  cannot  show  any  preferences  without  making  himself  lia- 
ble for  damages.  Much  is  heard  among  the  people  about  the  giving  of 
undue  preferences  to  one  man  or  one  community  as  against  another. 
Under  the  common  law  a  common  carrier  has  no  right  to  give  prefer- 
ences, and  is  liable  in  an  action  for  damages  for  accepting  for  transpor- 
tation the  goods  of  one  man  in  preference  to  another,  or  for  granting 
favors  to  one  over  another  in  the  amount  charged  for  similar  service. 
Hutchiuson,  in  his  work  on  common  carriers,  says  that — 

The  very  definition  of  a  common  carrier  excludes  the  right  to  grant  monopolies  or 
to  give  special  or  unequal  preferences.  It  implies  indifference  as  to  whom  they  may 
serve,  and  an  equal  readiness  to  serve  all  who  may  apply  in  the  order  of  their  ap- 
plication. 


40  INTERSTATE    COMMERCE. 

It  will  be  seen  by  the  foregoing  brief  general  statement  of  the  law 
as  applied  to  common  carriers  that  no  common  carrier  has  the  right 
under  the  common  law  to  discriminate  between  persons  or  places,  or 
to  give  preferences  in  any  manner.  The  theory  of  the  common  law  is 
that  all  who  are  situated  alike  must  be  treated  alike.  Unjust  discrimi- 
nation is  the  chief  cause  of  complaint  against  the  management  of  rail- 
roads in  the  conduct  of  business,  and  gives  rise  to  much  of  the  press- 
ure upon  Congress  for  regulative  legislation.  The  railroad  companies 
do  not  recognize  as  they  should  the  fact  that  they  sustain  a  different  re- 
lation to  the  public  from  persons  engaged  in  ordinary  business  enter- 
prises. Eailroad  companies  are  not  disposed  to  regard  themselves  u  as 
holding  a  public  office  and  bound  to  the  public,"  as  expressed  in  the 
ancient  law.  They  do  not  deal  with  all  citizens  alike.  They  dis- 
criminate between  persons  and  between  places,  and  tbe  States  and 
Congress  are  consequently  called  on  to  in  some  way  enforce  the  plain 
principles  of  the  common  law  for  the  protection  of  the  people  against 
the  unlawful  conduct  of  common  carriers  in  carrying  on  the  commerce 
of  the  country. 

If  the  law  as  it  now  stands,  and  as  it  has  over  and  over  again  been 
interpreted  by  the  courts,  in  relation  to  the  legal  status  and  duties  of 
railroads  towards  the  public,  were  enforced,  there  would  be  no  occasion 
for  either  the  States  or  the  National  Government  to  take  any  action 
with  a  view  to  the  regulation  of  commerce,  either  State  or  interstate. 
But  the  law  is  not  enforced,  for  reasons  which  will  hereafter  be  ex- 
plained, and  the  experience  of  all  States  and  nations  where  railroads 
have  been  built  shows  that  the  people  cannot  with  safety  rely  upon  the 
ordinary  common  law  remedies  to  protect  them  against  unjust  discrim- 
ination and  extortion.  In  the  language  of  one  gentleman  who  came 
before  this  committee,  "  the  ordinary  courts  are  open  theoretically,  but 
they  are  closed  practically  to  the  individual  man  who  has  a  grievance." 
The  man  imposed  upon  by  a  railroad  company  in  his  dealings  with  it 
has  under  the  common  law  his  right  of  action  against  the  company  for 
damages,  and  can  go  into  court  to  enforce  his  right,  but  experience  has 
shown  that  in  most  cases  he  does  not  do  so  because  he  cannot  on  ac- 
count of  the  expense,  and  especially  because  of  the  difficulty  of  making 
the  necessary  proof  to  sustain  his  action.  Hence  it  is  that  statutes 
have  been  passed  in  aid  of  the  common  law,  in  many  States  the  rule  of 
evidence  being  changed  ia  causes  between  the  people  and  the  railroads 
and  provision  made  for  commissions  or  special  tribunals  to  aid  in  the 
enforcement  of  the  law. 

It  is  not  deemed  best  to  discuss  the  law  in  relation  to  the  care  and 
delivery  of  goods  by  common  carriers,  or  the  loss  of  goods  in  possession 
of  such  carriers,  or  the  exceptions  to  the  carrier's  liability  under  the  law 
as  to  passengers  or  goods,  as  such  a  discussion  would  require  more 
space  than  it  would  be  proper  to  use  in  this  report. 

THE  EELATIONS  OF  THE  RAILKOAD  TO  THE  COMMUNITY 
AND  TO  THE  GOVERNMENTAL  AUTHORITY.— THE  OBLI- 
GATIONS IMPOSED  BY  ITS  PUBLIC  NATURE  AND  ITS 
EXERCISE  OF  A  PUBLIC  FUNCTION. 

As  a  common  carrier  and  as  the  privileged  manager  of  the  business 
of  transportation  upon  a  public  highway,  the  relations  and  obligations 
of  the  railroad  to  the  community  and  to  the  governmental  authority  are 
essentially  different  from  those  of  the  ordinary  corporation  which  does 
not  enjoy  similar  exclusive  privileges  or  perform  a  public  function.  In 
the  very  nature  of  these  distinctions  and  in  the  peculiar  relations  they 
occasion  are  to  be  found  the  reasons  which  justify  and  render  necessary 


INTERSTATE    COMMERCE.  41 

the  legislative  regulation  of  the  railroad  corporations  engaged  in  the 
business  of  transportation  for  the  public  convenience.  The  State  pri- 
marily gains  its  right  to  exercise  such  regulation  because  the  railroad 
proper,  as  a  line  of  communication,  is  a  public  highway,  and  necessarily 
subject  to  the  same  supervision  as  any  other  public  road.  But  this  right 
might  perhaps  be  restricted  to  the  exercise  of  the  same  degree  of  super- 
vision as  roads  and  highways  are  subject  to,  and  might  not  extend  to 
the  management  of  the  business  carried  on  by  the  railroad  company, 
it'  based  upon  this  ground  alone.  As  the  State  itself,  in  this  country,, 
has  not  deemed  it  advisable  to  construct  and  operate  this  class  of  high- 
ways, that  work  has  been  left  to  private  enterprise,  and  it  lias  been 
the  universal  policy,  first  as  a  matter  of  necessity,  and  since  of  con- 
venience,  to  place  the  construction  and  management  of  the  railroad  in, 
the  hands  of  an  artificial  person,  which  assumed  the  duties  of  the  State 
in  this  respect,  and  in  return  was  authorized  to  collect  tolls  to  meet  the 
expenses  of  operation  and  maintenance,  and  to  yield  a  reasonable  re- 
turn upon  the  capital  invested. 

The  only  reason  for  the  existence  of  railroad  corporations,  is  that 
they  might  undertake  a  duty  which  the  State  was  unable  or  unwilling 
to  perform,  and  to  that  extent  they  exercise  a  public  function.  In  the 
performance  of  this  duty  private  capital  was  invested,  for  the  use  of 
which  it  was  proper  that  due  return  should  be  made.  It  was  also 
necessary  to  provide  in  some  way  for  the  expenses  of  maintenance  and 
operation.  As  the  most  convenient  and  equitable  method  of  raising 
whatever  amounts  should  be  needed  for  these  purposes,  such  corporations 
have  been  authorized  to  collect  these  amounts  from  the  persons  making 
use  of  the  facilities  for  transportation  afforded  by  the  railroad ;  or,  in 
other  words,  to  place  this  burden,  which  must  in  some  way  be  borne  by 
the  people,  upon  the  passengers  and  freight  transported  instead  of  upon 
the  property  of  the  entire  community,  as  other  taxes  are  commonly 
levied.  By  granting  railroad  corporations  authority  to  thus  levy  a  tax 
upon  commerce,  even  with  the  expressed  or  implied  reservation  that 
their  charges  should  be  reasonable,  they  were  necessarily  given  a  mo- 
nopoly of  this  right,  at  least,  so  far  as  their  own  highways  were  con- 
cerned, and  the  fact  that  such  a  corporation  is  in  the  nature  of  a  monop- 
oly is  a  stronger  and  broader  reason  why  it  should  be  subject  to  the 
control  and  regulation  of  the  State,  and  widely  extends  the  jurisdiction 
and  rights  of  the  State  in  that  respect.  And  as  the  agents  of  the 
State  in  supplying  the  community  with  facilities  for  transportation,  the 
railroad  corporations  necessarily  rest  under  the  same  obligations  to 
deal  fairly  and  equitably  with  ail  its  citizens,  without  favoritism  or  dis- 
crimination, as  the  State  itself. 

The  public  nature  of  these  corporations  has  been  uniformly  maintained 
by  the  courts  and  legislatures  of  the  several  States.  In  Massachusetts, 
for  example,  as  Judge  Kussell,  the  chairman  of  the  railroad  commission, 
stated  to  the  committee : 

Our  supreme  court  has  always  held  very  strictly  the  doctrine  that  railroad  corpora- 
tions are  public  corporations,  created  solely  for  the  good  of  the  public,  and  that  they 
are  to  be  dealt  with  accordingly.  A  great  many  years  ago  Mr.  Choate  said  to  the  leg- 
alature,  "Railroads  are  made  for  the  people  and  not  the  people  for  the  railroads;" 
and  that  idea  has  been  adopted  by  the  supreme  court  in  this  State.  The  doctrine 
that  a  railroad  corporation  is  a  public  corporation,  existing  solely  for  the  benefit  of 
the  people  and  not  of  the  stockholders,  has  been  stated  by  Chief-Justice  Shaw  and 
Justice  Gray,  who  was  lately  our  chief-justice,  as  strongly  and  as  clearly  as  ever  any 
granger  asked  to  have  it  stated.  (Testimony,  p.  301.) 


42  INTERSTATE    COMMEECE. 

These  principles  are  well  settled,  and  since  the  decisions  by  the 
United  States  Supreme  Court  in  the  "  Granger  Cases"  brought  the 
railroads  to  a  realizing  sense  of  their  obligations  they  have  been  sub- 
stantially conceded.  But  when  we  consider  the  imperial  influence 
which  these  most  mighty  engines  of  civilization  can  exercise  upon  the 
development,  progress,  and  commerce  of  the  country,  making  possible 
the  ruin  or  prosperity  of  cities,  States,  or  even  larger  areas  of  our  terri- 
tory by  the  exercise  of  their  power,  it  becomes  evident  that  the  State 
possesses  the  right  to  supervise  and  regulate  the  administration  of  such 
imperial  power  upon  the  broad  ground  of  public  policy,  in  addition  to 
the  fact  that  a  railroad  corporation  jaanages  a  public  highway,  exer- 
cises a  public  function,  and  is  in  the  nature  of  a  monopoly. 

The  extent  of  the  obligations  of  the  railroad  to  the  State  and  of  the 
State  to  the  railroad  is  well  expressed  by  the  railroad  commissioners  of 
New  York,  who,  in  a  report  to  the  legislature  of  that  State,  summarize 
their  conclusions  upon  the  subject  as  follows : 

A  common  carrier  thus  created  becomes  at  common  law  a  quasi  public  servant, 
bound,  as  the  price  of  its  privileges  conferred,  to  carry  all  persons  and  property  offered 
to  it  for  a  just  and  reasonable  compensation,  and  with  due  regard  to  public  safety  and 
convenience.  It  is  the  right  and  duty  of  the  State,  either  in  the  original  charter,  or 
by  subsequent  legislative  or  other  action,  to  see  that  the  citizen  has  service  to  which 
he  is  thus  entitled,  to  prevent  railroads  from  assuming  rights  and  privileges  not 
granted,  to  compel  the  correction  of  abuses,  and  to  require  the  performance  of  duties 
assumed.  No  less  has  the  railroad  at  least  a  well-recognized  equitable  right  to  insist 
that  the  State  shall  guard  its  property ;  that  it  shall  be  protected  in  the  exercise  of 
its  chartered  privileges,  and  that  subsequent  legislation  shall  not  exceed  the  limits 
above  stated. 

This  position  towards  its  citizens  and  towards  its  railroads  the  State  ever  and  un- 
ceasingly occupies.  For  instance,  the  right  conferred  to  impose  and  collect  fares  and 
freight  rates  is  the  permission  of  the  State  to  exact  from  transportation  and  com- 
merce a  tax  in  return  for  a  public  service  required  of  and  performed  by  the  railroad. 
The  amount  of  this  tax,  in  a  just  and  equitable  view,  and  based  on  a  public  policy 
which  duly  regards  good  faith,  and  which  is  liberal  enough  to  promote  and  sustain 
prompt,  efficient,  and  constantly  improving  service  on  the  part  of  railroads,  is  that 
amount  which  will  pay  expenses  and  a  fair  return  upon  the  capital  of  the  corporation 
invested. 

To  keep  the  tax  within  this  limit  is  the  duty  of  the  State  towards  its  crtizens ;  to 
sustain  it  at  this  point  is  the  corporation's  right,  in  the  enforcement  of  which  the 
State  ought  not  to  interfere. 

The  relations  of  the  railroad  to  the  community  and  to  the  Govern- 
ment are  complicated  by  its  corporate  character,  and  by  the  difference 
between  an  investment  in  a  railroad  and  in  an  ordinary  individual  com- 
mercial enterprise.  As  the  construction  of  a  railroad  is  usually  an  un- 
dertaking of  too  great  magnitude  for  the  limited  capital  of  a  single  in- 
dividual, or  even  of  two  or  three  individuals,  it  necessarily  requires  the 
combination  of  private  capital  in  a  corporation ;  such  an  investment 
as  necessarily  becomes  largely  a  speculative  one,  because  of  the  risks 
taken  by  the  investor.  By  placing  his  capital  in  a  corporation,  the  in- 
dividual loses  control  of  it,  and  must  take  the  chance  of  having  it  man- 
aged to  the  best  advantage  by  others,  and  of  being  fairly  dealt  with  by 
them.  But  this  is  not  his  only  risk.  He  cannot  expect  any  immediate 
return  from  his  investment.  He  must  look  to  the  future  success  of  the 
enterprise,  not  only  for  his  profit,  but  for  an  opportunity  to  turn  his  cap- 
ital into  other  channels.  Unless  he  is  fairly  treated,  and  the  enterprise  be- 
comes a  profitable  one,  he  loses  not  only  his  expected  profits,  but  his  en- 


INTERSTATE    COMMERCE.  43 

tire  investment  as  well.  He  cannot  recall  his  capital  if  it  is  any  object 
to  do  so.  The  merchant  who  finds  it  necessary  to  discontinue  operations 
because  of  the  stress  of  competition,  of  unexpected  changes  in  the  con- 
ditions of  trade,  or  of  continued  business  depression,  can  pocket  his 
losses,  and  either  close  out  his  business  or  transfer  his  stock  to  another 
field  without  perhaps  seriously  impairing  his  original  capital.  No  such 
alternatives  are  open  to  a  railroad  corporation.  If  built  where  it  was 
not  needed,  or  if  located  in  a  region  whore  there  is  not  enough  traffic 
to  support  it — facts  that  cannot  always  be  determined  in  advance — its 
rails  cannot  be  taken  up  and  transferred  to  a  be  tter  field,  nor  can  it  afford 
to  suspend  operations.  The  capital  expended  is  permanently  invested  in 
the  enterprise  vor  weal  or  for  woe,  and  the  i  n  vector's  only  hope  of  legitimate 
profit  is  in  its  success.  Such  investments,  therefore,  assume  very  largely 
a  speculative  character,  in  which  profits  are  hoped  for  commensurate  with 
the  risks  assumed.  On  the  other  hand,  however,  there  are  advantages 
to  be  considered  in  this  form  of  investment.  Whatever  may  be  the  out- 
come, the  investor  knows  exactly  the  extent  of  his  liability.  If  the  cor- 
poration goes  to  the  wall,  he  loses  his  money,  and  that  is  the  end  of  it. 
Somebody  else  comes  into  possession  of  the  property,  but  he  cannot  be 
called  upon  to  make  good  the  corporation's  indebtedness.  This  protec- 
tion is  needed  by  small  investors,  and  without  them  it  would  have  been 
difficult  to  obtain  the  aggregations  of  capital  which  have  been  required 
for  the  construction  of  railroads,  but  the  naturally  speculative  charac- 
ter of  these  investments  has  been  largely  increased  by  the  opportunities 
afforded  to  those  able  to  secure  the  control  of  the  combinations  of  capital 
thus  brought  together.  Railroad  corporations  have  been  organized  and 
manipulated  by  speculators;  rings  within  rings  have  controlled  their 
operations  and  fattened  on  their  revenues ;  u  railroad  wrecking  "  has  be- 
come a  fine  art ;  values  have  been  made  to  fluctuate  wildly,  without  due 
cause ;  panics  have  been  occasioned  by  the  magnitude  of  these  opera- 
tions, and  the  whole  railroad  system,  as  well  as  the  commerce  of  the 
country,  will  suffer  for  years  from  the  effects  of  those  eras  of  mad  specu- 
lation which  are  yet  fresh  in  the  memory  of  all. 

Few  railway  properties  in  this  country  have  escaped  the  injurious 
effects  of  speculative  manipulation.  The  processes  through  which  they 
have  passed  are  familiar,  and  the  result  has  been  a  fierceness  of  compe- 
tition that  stopped  at  no  form  of  discrimination,  reckless  rate  wars,  and 
a  lack  of  stability  and  uniformity  that  has  given  an  element  of  nncer 
tainty  to  all  commercial  transactions. 

SOME   OF   THE   DIFFICULTIES   OF   EFFECTIVE    STATE   REGULATION. 

Any  absolute  or  comprehensive  regulation  of  the  railroad  system  of 
the  United  States  would  include  the  official  supervision  of  every  step 
taken  from  the  granting  of  a  charter,  and  selection  of  a  route  on  through 
all  the  financial  operations  incidental  to  the  organization  of  a  company 
and  the  construction  of  the  line,  and  of  the  policy  pursued  by  the  man- 
agement after  the  road  begins  business.  While  ample  authority  for 
such  thorough  supervision  unquestionably  exists,  the  powers  of  the 
States  and  of  the  General  Government  are  so  divided  as  to  make  it  dif- 
ficult, if  not  impracticable,  to  secure  a  uniform  system  of  regulation 
applicable  alike  in  all  the  details  mentioned  to  the  entire  system.  The 
States  have  chartered  the  railroads  of  the  United  States,  and  there  car. 
be  no  assurance  of  concert  of  action  among  them,  or  of  any  degree  of  uni- 
formity in  their  legislation  with  respect  to  the  granting  of  charters  or 
the  control  of  the  financial  operations  of  such  corporations  when  or- 


44  INTERSTATE    COMMERCE. 

ganized.    It  was  with  this  difficulty  in  view  that  Mr.  Simon  Sterne  made 
the  following  suggestion : 

I  recognize  the  difficulty,  and  perhaps,  for  the  purpose  of  meeting  that  question, 
sooner  or  later  we  shall  have  to  pass  a  constitutional  amendment  to  clothe  the  Gen- 
eral Government  with  the  exercise  of  the  power  of  eminent  domain  within  the  sev- 
eral States,  for  the  purpose  of  chartering  interstate  lines  and  assigning  to  existing 
State  lines  fields,  and  probably,  without  such  a  constitutional  amendment,  whatever 
exercise  of  power  Congress  may  see  fit  to  put  forth  may  be  challenged,  and  probably 
will  be  challenged,  in  the  courts,  as  an  impairment  of  the  rights  of  the  States ;  but 
it  is  well  to  recognize  a  difficulty  which  presents  itself  on  the  outset  of  the  question, 
for  the  purpose  of  seeing  whether  what  we  are  doing  is  not  merely  a  tentative  meas- 
ure until  we  can  produce  more  far-reaching  and  wider  results  by  changes  in  the  or- 
ganic law.  (Testimony,  p.  57.) 

It  was  also  urged  by  the  same  witness  that  the  concentrated  powers 
of  these  great  instrumentalities  of  commerce  had  in  various  States 
proved  too  powerful  for  the  State  Government.  His  words  were  : 

I  do  not  say  that  in  a  hypercritical  mood,  but  it  is  in  human  nature  that  it  should 
he  so.  You  get  an  institution  like  the  Standard  Oil  Company,  with  its  $50,000,000  of 
capital,  or  an  institution  like  the  Burlington  and  Qnincy  Railroad,  or  the  Northwest- 
ern Railroad,  running  through  several  States,  and  you  concentrate  that  power  at  any 
State  capital,  the  temptations  are  almost  irresistible  to  bow  to  the  powers  that  be, 
even  if  not  corruptly,  for  the  purpose  of  gaining  its  favor,  on  the  part  of  an  ambi- 
tions young  legislator  who  is  a  lawyer  and  who  desires  to  be  appointed  as  connsel  for 
the  company  in  a  particular  district,  and  thus  to  make  himself  a  member  of  like  in- 
struments of  commerce  and  of  influence.  They  have,  like  every  other  great  agency, 
means  of  corruption  that  are  not  merely  pecuniary.  Then,  the  press  is  under  their 
influence  to  a  considerable  extent ;  they  are  large  advertisers  ;  and  it  becomes  a  seri- 
ous consideration  in  this  country  whether,  independent  of  the  question  of  freight 
charges  and  passenger  traffic  and  individual  rates,  for  the  purpose  of  protecting  the 
general  weal  it  is  not  essential  that  these  instrumentalities  should  be  subordinated 
to  the  General  Government.  (Testimony,  p.  67.) 

Whatever  may  have  been  the  extent  to  which  the  influences  alluded 
to  have  been  used,  the  fundamental  difficulties  arising  from  the  consti- 
tutional organization  of  our  dual  system  of  State  and  National  Govern- 
ment preclude  the  possibility  of  effective  and  satisfactory  regulation  of 
the  business  of  transportation  by  the  States  alone.  The  difficulty  oc- 
casioned by  this  division  of  power  and  jurisdiction  between  the  States 
and  the  General  Government  is  encountered  at  every  step  taken  when 
an  attempt  is  made  to  devise  a  plan  of  regulation.  Nevertheless,  while 
the  solution  of  the  railroad  problem  might  be  greatly  facilitated  by  the 
giving  of  exclusive  jurisdiction  over  all  the  operations  of  the  entire 
railroad  system  to  the  General  Government,  there  is  no  occasion  to 
consider  the  necessity  of  a  constitutional  amendment  until  it  has  been 
demonstrated  by  actual  trial  that  the  powers  now  possessed  by  Congress 
cannot  be  exercised  effectively. 

In  several  of  the  decisions  already  quoted,  the  courts  have  pointed 
out  the  impracticability  of  allowing  each  State  to  impose  such  restric- 
tions as  it  pleased  upon  the  commerce  passing  into,  through,  or  beyond 
its  borders,  and  have  confined  the  jurisdiction  of  the  State's  authority  to 
the  commerce  originating  and  terminating  within  its  own  domain,  that 
which  is  strictly  domestic.  Commerce  must  be  State  or  interstate,  and 
either  can  be  subject  to  but  one  jurisdiction  and  set  of  regulations. 
This  is  evidently  the  only  safe  rule.  The  disastrous  effects  of  any  other 
construction  need  not  be  enlarged  upon. 


INTERSTATE    COM  MERGE.  45 

In  the  exercise  of  their  undoubted  right  to  regulate,  the  States  have 
been  hampered  by  their  inability  to  apply  their  regulations  to  inter- 
state commerce,  which  comprises,  in  most  instances,  the  greater  portion 
of  the  business  transacted  within  their  borders  by  railroads.  The  es- 
sence of  the  effective  regulation  of  business  transactions  is  equality 
and  uniformity,  and  this  is  impossible  as  to  two  transactions  alike  in 
every  other  respect  when  one  reaches  across  a  State  line  and  the  other 
does  not.  In  the  controversies  that  naturally  arose  over  these  questions 
in  different  States,  as  the  records  of  the  courts  demonstrate,  the  rail- 
road companies  have  not  hesitated  at  every  opportunity  to  insist  upon 
and  take  advantage  of  the  exclusive  power  of  Congress  to  regulate  in- 
terstate commerce.  And,  on  the  other  hand,  the  records  of  Congress 
show  that  they  have  been  equally  swift  to  maintain  and  to  deprecate 
interference  with  the  rights  of  the  States  whenever  national  regulation 
has  been  proposed.  With  its  authority  restricted  to  less  than  half  of 
the  business  operations  of  the  transportation  companies  subject  to  its 
jurisdiction,  the  obstacles  encountered  by  a  State  in  the  exercise  of  a 
satisfactory  supervision  over  the  railroads  engaged  in  business  within 
its  borders  and  in  the  administration  of  equal  justice  to  all  its  citizens 
who  might  use  them  are  apparent.  When  these  difficulties,  with  all  the 
opportunities  they  present  for  evasion  of  the  State's  authority,  are  un- 
derstood, it  is  not  a  matter  of  wonder  that  the  various  State  commis- 
sions should  fail  to  accomplish  all  that  has  been  expected  of  them,  but 
it  is  rather  a  matter  of  surprise  that  they  should  have  succeeded  in 
bringing  about  the  beneficial  results  which  are  acknowledged  as  a  re- 
sult of  their  labors. 

IRRESPONSIBLE   RAILROAD   MANAGEMENT. 

In  the  consideration  of  the  proper  relations  of  the  railroad  to  the  State 
and  to  its  citizens  it  is  important  that  the  position  occupied  by  the  man- 
agement as  well  as  by  the  railroad  should  be  clearly  understood.  The^ 
reckless  manner  in  which  railroads  are  often  managed  makes  it  neces- 
sary to  distinguish  between  the  official  management  of  a  railroad,  which 
under  the  existing  methods  of  organization  may  be  irresponsible  and 
governed  by  selfish  personal  considerations,  and  the  corporation  itself 
as  representing  the  stockholders  and  investors  whose  property  is  con- 
trolled by  the  management.  Should  the  railroad  be  operated  mainly  in 
the  temporary  interest  of  the  managers  it  may  be  used  for  speculative 
purposes  or  in  such  a  manner  as  to  depreciate  or  destroy  the  value  of 
the  property,  thus  abusing  the  rights  of  the  owners  and  at  the  same 

time  necessarily  injuring  the  business  of  the  community.     Under  such 

conditions  the  true  interests  of  the  corporation  itself  are  not  properly 
recognized  and  served  by  the  managers,  who  lose  sight  of  the  law  that 
the  prosperity  of  the  corporation  depends  upon  a  recognition  of  the  mu: 
tuality  and  interdependence  of  the  interests  of  the  railroad  and  its  pa- 
trons. The  possibility  and  existence  of  irresponsible  railroad  manage- 
ment result  in  a  confusion  of  ideas  and  terms  that  aids  in  mystifying  the 
railroad  problem,  and  is  in  itself  an  evil  so  far-reaching  in  its  effects  as 
to  call  for  special  consideration. 

If  it  were  proper  tor  this  committee,  in  conducting  an  investigation 
of  such  a  general  character,  to  institute  comparisons  as  to  the  manner 
in  which  particular  roads  are  managed,  it  would  be  no  difficult  task  to 
show  the  same  difference  in  results  between  responsible  and  irrespon- 
sible official  management  that  is  exhibited  in  all  other  business  enter- 
prises. And  it  is  believed  that  a  thorough  analysis  of  the  complaints 


46  INTERSTATE    COMMERCE. 

made  against  railroads  in  general,  if  specifications  should  be  called  lor, 
would  establish  the  fact  that  a  number  of  the  leading  corporations  in 
the  country  succeed  in  so  far  recognizing  their  obligations  to  the  com- 
munity as  to  leave  little  ground  for  complaint  on  the -part  of  those  who 
have  dealings  with  them,  and  that  no  inconsiderable  proportion  of 
the  evils  from  which  the  people  suffer  should  be  attributed  to  the  char- 
acter of  the  management  of  the  roads  most  complained  of  rather  than 
to  that  unavoidable  necessity  which  such  officials  plead  in  justification 
of  their  methods,  or  to  the  inherent  defects  of  the  organization  of  the 
entire  railroad  system,  or  to  the  absence  of  regulation. 

There  is  reason  to  believe  that  the  railroad  system  of  the  United  States 
has  reached  a  point  where  its  expansion  will  be  less  rapid  in  the  years 
to  come,  and  where  of  necessity  more  attention  must  and  will  be  de- 
voted to  the  science  of  management.  As  a  whole,  the  system  is  still  in 
a  formative  state,  and  it  is  impossible  to  foretell  with  accuracy  the 
future  character  or  direction  of  its  development.  It  may  not  inaptly 
be  compared  to  a  youth  who  has  by  rapid  growth  attained  the  stature 
of  manhood,  but  whose  mental  and  moral  development  has  been  out- 
stripped by  his  physical  growth  and  does  not  yet  fairly  indicate  his 
future  character  or  disposition. 

The  fact  that  it  has  been  possible  for  some  of  the  best  railroad  prop- 
erties in  the  country,  possessing  no  greater  natural  advantages  than 
are  enjoyed  by  others  similarly  situated  but  less  successful,  to  be  so 
managed  as  to  give  occasion  for  no  special  complaint  from  any  quarter, 
and  the  further  fact  that,  as  a  general  rule,  the  smallest  proportion  of 
complaints  are  charged  against  the  more  prosperous  roads,  show  that 
in  the  railroad  business,  as  in  every  other,  honest  and  efficient  manage- 
ment is  the  wisest  and  most  profitable. 

In  the  light  of  these  facts  there  is  at  least  ground  for  hope  that  the 
evils  directly  resulting  from  reckless  and  irresponsible  railroad  man- 
agement may  in  time  bring  their  own  remedy,  and  that  the  demand  may 
some  time  cease  for  officials  whose  usefulness  is  measured  by  their  capac- 
ity to  deceive  and  cheat  their  competitors.  Until  that  period  arrives, 
reliance  must  be  had  upon  legislation  for  the  prevention  of  inequitable 
and  reprehensible  practices  which  have  become  recognized  features  of 
railway  management. 

While  it  is  sometimes  necessary  to  recognize  the  distinction  that  may 
exist  between  a  raflroad  as  a  corporation  and  its  management,  it  is 
equally  important  to  bear  in  mind  that  measures  which  may  be  for  the 
interes,  of  individual  shippers  may  not  be  for  the  interest  of  the  com- 
munity. The  evils  which  individuals  see  most  plainly  are  those  which 
directly  anvct  themselves,  and  the  tendency  is  to  suggest  and  ask  for 
measures  of  regulation  calculated  to  remedy  the  particular  difficulty 
with  which  each  person  comes  in  contact.  It  is  natural  that  these 
questions  should  usually  be  looked  at  from  a  local  standpoint,  but  the 
legislator  must  take  a  broader  view  of  them.  The  true  interests  of  a 
railroad  corporation  are  identical  with  those  of  the  community  as  an 
entirety,  and  the  true  principle  which  should  govern  the  action  of  leg- 
islators and  railroad  officials  is  lost  sight  of  when  undue  preference  is 
given  to  the  interests  of  any  particular  class  or  locality,  either  by  the 
managers  of  the  road  or  by  the  legislation  enacted  for  its  regulation  j 
and  this  is  equally  true  whether  the  attempt  be  made  to  unduly  favor 
the.  interests  of  the  stockholders,  or  to  artificially  build  up  certain  cities 
or  localities,  or  to  extend  undue  advantages  to  those  engaged  in  any 
given  industry  or  branch  of  trade. 


INTERSTATE    COMMERCE.  47 

THE   PROTECTION   OF   STOCKHOLDERS. 

It  is  a  singular  feature  of  the  existing  condition  of  affairs  that  legis- 
lation is  now  asked  of  Congress  for  the  protection  of  the  interests  of 
stockholders  almost  as  urgently  as  for  years  past  it  has  been  sought  for 
the  protection  of  the  people  who  use,  but  do  not  own,  the  railroads. 
This  demand  was  voiced  by  Mr.  George  K.  Blanchard,  a  recognized 
representative  of  the  railroad  interest,  who  based  the  request  upon  the 
follow  ing  grounds : 

The  Cocgress  of  the  United  States  owes  the  investors  in  the  securities  of  legally 
organized  railroads  just  as  much  protection  and  encouragement  as  it  owes  the  farm- 
ers, who  are  not  investors  in,  but  do  greatly  use,  these  railroads.  In  other  words,  the 
broad  idea  of  every  national  legislator  I  have  ever  met  is  that  his  duties  extend  to  all 
classes  of  people.  Look,  for  example,  at  the  widespread  ruin  that  has  come  upon  the 
thousands  of  investors  (not  the  speculators)  of  this  country  by  cut,  preferential,  and 
therefore  discriminating,  and  unstable  rates,  in  the  last  four  years,  as  compared  with 
the  absoence  of  ruin  to  the  farmers  of  this  country.  The  bona  fide  investors  have 
lost  millions  out  of  their  pockets  from  the  voluntary  reductions  in  rates  or  the  con- 
tests of  their  companies,  but  from  whatever  cause  they  have  in  every  case  benefited 
the  farmers  and  others ;  and  I  say  that  one  of  the  views  your  committee  ought  to 
hold  is  the  equally  interested  and  just  protection  of  the  investors  who  own  the  rail- 
ways, as  well  as  the  receiver  and  sender  of  traffic  over  them  that  do  not  own  them. 
(Testimony,  p.  16J.) 

In  answer  to  an  inquiry  as  to  who  are  the  investors  in  railways,  Mr. 
Blanchard  said : 

I  believe  the  books  of  sound  railway  companies  will  show  that  about  80  percent,  of 
their  bonds  are  held  by  a  class  known  as  investors  and  bondholders,  and  the  remain 
ing  20  per  cent,  are  spread  through  small  holders  in  all  the  avenues  of  life. 

While,  as  carefully  expressed  by  Mr.  Blauchard,  the  justice  of  the 
claim  that  the  stockholding  interest  is  entitled  to  the  same  degree  of 
protection  and  consideration  as  that  of  the  patrons  of  the  railroads 
may  be  admitted,  it  seems  impracticable  for  Congress  to  devise  specific 
regulations  for  the  protection  of  stockholders,  for  the  reasons  suggested 
by  Mr.  Sterne,  as  follows : 

I  take  it  Congress  will  meet  with  considerable  difficulty  in  any  attempt  to  protect 
the  stockholding  interest.  As  a  rule  railway  corporations  have  been  chartered  by 
the  States  and  not  by  the  General  Government.  Therefore,  as  to  their  relations  to 
the  stockholder  and  to  the  investor,  they  will  claim  entire  immunity  from  Congress 
ional  legislation  in  that  respect ;  and  any  law  you  may  recommend  the  passage  of. 
and  that  may  finally  get  upon  the  statute-book,  which  will  attempt  the  regulation  of 
the  financial  relations  of  the  corporation  to  its  stockholders,  or  the  director  to  its 
stockholders,  will  meet  with  determined  opposition  on  the  part  of  the  railroad  corpo- 
porations  as  unconstitutional,  on  the  ground  that  that  is  not  the  regulation  of  com- 
merce, for  in  that  respect  they  do  not  perform  any  public  function,  but  that  is  a  pri- 
vate relation  between  the  stockholder  and  the  corporation,  and  if  the  directors  see 
fit  to  cheat  and  swindle  the  stockholders  it  is  none  of  the  business  of  Congress,  for 
they  are  responsible  to  the  particular  States  which  gave  them  their  charters  and 
created  their  organizations.  Otherwise  I  should  suggest  that  but  for  that  difficulty 
of  power  it  would  be  your  duty  to  recommend  some  form  of  protection  to  stock- 
holders analogous  to  that  which  exists  in  England,  where  the  stockholding  interest 
is  better  protected  than  in  the  United  States.  Under  the  English  law  as  the  stock- 
holding interest  of  the  individual  shareholder  increases  his  relative  voting  power 
decreases.  A  man  has  one  vote  for  every  share  up  to  ten ;  then  he  has  one  vote  for 
every  five  shares  up  to  one  hundred,  and  then  one  for  every  ten  beyond  that ;  so  that 


48  INTERSTATE    COMMERCE. 

his  progressive  power  does  not  increase  arithmetically  with  his  increase  of  stockhold- 
ing interest.  The  small  shareholder  is  protected  by  the  English  legislation  through- 
out, so  that  he  is  not  overslaughed  by  the  large  stockholding  interest.  Then  they 
have  a  much  more  direct  responsibility  of  the  directors  to  the  corporation.  They  are 
required  to  advertise  semi-annual  meetings,  to  have  them  at  certain  public  places, 
and  they  are  required  to  do  many  things  iu  the  way  of  reports  which  we  have  neg- 
lected to  provide  for.  Perhaps  the  most  potent  and  beneficial  restilt  that  could  be 
accomplished  in  the  way  of  improvement  of  legislative  methods  as  between  the  direc- 
tors aiid  the  stockholding  interest  is  the  introduction  of  some  system  of  minority 
representation  in  boards  of  direction,  so  that  the  board  of  directors  would  be  a  reduced 
photograph  of  the  whole  stockholding  interest.  (Testimony,  p.  82.) 

THE  CONSTRUCTION  OF  UNNECESSARY  RAILROADS. 

The  committee  has  been  impressed  by  the  unanimity  with  which  the 
witnesses  examined  agreed  in  attributing  the  evils  most  complained  of  to 
transactions  which  have  been  made  possible  by  the  lax  general  legislation 
of  the  several  States,  such  as  the  construction  of  unnecessary  railroads 
for  speculative  purposes,  fictitious  capitalization,  and  all  the  fraudulent 
financial  schemes  by  which  such  enterprises  have  been  notably  charac- 
terized. It  has  been  contended  by  the  railroad  officials  that  the  funda- 
mental cause  of  the  evils  admitted  to  exist  has  Deen  the  building  of 
unnecessary  railroads,  and  to  this  cause  they  attributed  the  disastrous 
wars  which  have  demoralized  business,  which  have  enormously  depre- 
ciated the  values  of  railway  securities,  and  which  have  led  to  every  va- 
riety of  objectionable  discriminations. 

Commissioner  Fink,  for  example,  attributed  the  practice  of  unjust 
discrimination  in  all  its  varied  forms  to  "  the  fact  that  there  have  been 
created  in  this  country  under  the  laws  of  the  several  States  some  fifteen 
hundred  independent  railroad  companies,  each  one  having  the  legal 
right  to  establish  such  tariffs  as  it  may  see  fit,  and  under  such  circum- 
stances it  must  not  be  expected  that  tariffs  constructed  independently 
by  so  many  companies  should  not  be  conflicting  and  unjust,  considered 
as  a  whole."  In  his  opinion,  "  the  first  cause  of  all  these  evils  is  the 
building  of  unnecessary  roads." 

Mr.  George  R.  Blanchard  took  the  position  that  the  laws  of  the 
United  States  and  of  the  States  have  encouraged  the  building  of  par- 
allel roads,  and  that  there  ought  to  be  some  way  of  deciding  whether  a 
new  road  was  needed,  or  of  confirming  the  purpose  to  build  it,  or  of 
putting  its  building  under  just  limitations. 

And  Mr.  Frank  J.  Firth,  of  Philadelphia,  president  of  the  Erie  and 
Western  Transportation  Company,  added  his  testimony,  as  follows : 

The  community  at  large  is  vastly  more  interested  to-day  in  devising  some  proper 
method  to  restrict  the  needless  increase  of  transportation  facilities,  and  the  serious 
commercial  disturbances  resulting  therefrom,  than  it  is  in  any  other  phase  of  the 
transportation  question.  There  are  few  citizens,  whether  capitalists  or  laborers,  who 
are  not  interested  in  transportation  securities.  If  the  money  of  the  capitalist  is  in 
bank  stock,  trust  or  insurance  companies,  he  will  find  the  capital  and  surplus  of  these 
companies  largely  invested  in  and  dependent  on  the  railways.  If  the  laborer  de- 
posits his  hard-earned  savings  in  the  saving  banks,  it  is  to  find  that  these  institu- 
tions are  also  investors  in  and  largely  dependent  on  the  railways. 

The  most  serious  problem  that  will  confront  the  national  board  will  be  how  to  pro- 
tect the  railway  property  of  the  country  from  the  utter  ruin  that  threatens  it  as  the 
result  of  the  unrestrained  enlargement  of  the  transportation  facilities  of  the  country 
that  is  now  liable  to  take  place  at  any  time  that  a  band  of  speculative  capitalists 
may  see  an  opportunity  to  make  a  dishonest  profit  by  a  creation  of  such  facilities  and 
unloading  their  so-called  securities  on  a  confiding  public. 


INTERSTATE    COMMERCE.  49 

The  statistics  of  railroad  construction  show  that  the  wonderful  ex- 
tension of  the  system  within  the  last  few  years  has  been  out  of  propor- 
tion to  the  development  of  the  country  and  the  demand  for  increased 
transportation  facilities,  and  this  apparent  overproduction  of  railroad 
lines  accounts  in  a  measure  for  the  depression  from  which  that  interest 
is  suffering.  During  the  period  of  five  years,  including  the  years  1870, 
1871,  1872,  1873,  and  1874,  there  was  an  increase  of  27,252  miles  in  the 
total  railway  mileage  of  the  United  States,  or  15  per  cent.,  the  average 
yearly  increase  being  5,450.  In  the  next  similar  period,  covering  the 
years  1875,  187G,  1877,  1878,  and  1879,  which  was  a  period  of  unusual 
financial  depression,  the  increase  in  total  mileage  fell  to  14,114  miles,  or 
11  per  cent.,  the  average  annual  increase  being  2,822  miles,  or  but  little 
more  than  half  of  that  of  the  preceding  period.  But  within  the  last  five 
years  prior  to  1885  the  total  mileage  has  increased  from  86,497  to  over 
125,000  miles,  a  total  increase  of  some  39,000  miles,  or  about  45  per  cent., 
and  an  average  yearly  increase  of  7,800  miles.  During  this  last  period  the 
total  amount  of  capital  reported  invested  in  railroads  increased  from 
$4,800,000,000  to  about  $8,000,000,000,  an  increase  of  over  $3,000,000,000, 
or  over  62  per  cent.,  within  five  years.  Such  a  remarkable  expansion 
has  never  been  witnessed  in  any  other  important  interest  or  industry 
in  any  country,  and  its  inevitable  effect  upon  the  general  prosperity 
can  be  better  appreciated  when  it  is  remembered  that  according  to  the 
census  reports  the  railroads  represented  over  12£  per  cent,  of  the  esti- 
mated actual  wealth  of  the  United  States  in  the  last  census  year,  and  are 
now  supposed  to  represent  20  per  cent,  thereof. 

But,  whether  necessary  or  unnecessary,  these  new  lines  have  been 
constructed,  and  they  have  come  to  stay.  They  have  been  built  under 
authority  of  law,  and  it  is  too  late  to  question  the  legitimacy  of  the 
purpose  which  inspired  their  construction.  While  railroad  securi- 
ties continue  to  depreciate,  while  dividends  continue  fitful  and  un- 
certain, and  while  capital  grows  more  and  more  timid,  there  is  little 
danger  to  be  apprehended  from  speculative  railroad  building  in  the 
near  future.  But  the  experience  of  mankind  admonishes  us  that  his- 
tory will  repeat  itself,  and  that  these  speculative  eras  are  periodical  j 
and  with  a  few  years  of  general  prosperity  it  is  safe  to  assume  that  the 
hard-earned  lessons  of  the  past  will  be  disregarded,  and  that  the  mania 
for  speculative  construction  will  break  out  again.  Just  at  this  time, 
therefore,  when  the  evils  that  have  been  experienced  from  this  cause 
arc  most  apparent  and  generally  admitted,  an  unusually  favorable  op- 
portunity is  presented  to  guard  against  their  repetition  in  the  future. 

it  a  thorough  investigation  could  be  made  into  the  history  of  the  vari- 
ous enterprises  winch  are  denounced  as  unnecessary  and  as  speculative 
ventures,  with  a  view  to  ascertaining  the  causes  which  influence'd  the 
construction  of  such  new  lines,  the  committee  is  satisfied  that  it  would 
be  made  clear  that,  while  some  of  these  projects  were  inspired  by  the 
personal  self-interest  of  the  promoters,  who  counted  upon  gaining  hand- 
some profits  at  the  expense  of  a  confiding  public,  in  every  case  these 
operations  were  made  possible  by  the  misconduct  of  the  lines  they  were 
intended  to  injure,  and  in  most  cases  they  were  actively  aided  or  en- 
tirely engineered  by  rival  lines. 

It  has  been  the  settled  policy  of  the  stronger  corporations  to  secure, 
by  all  means  within  their  power,  the  absolute  control  of  all  the  traffic 
possible.  To  accomplish  this  purpose  they  have  endeavored  to  obttiin 
possession  of  the  roads  tributary  to  them,  especially  at  competing  points, 
in  order  to  divert  traffic  away  from  their  competitors.  These  in  turn, 
animated  by  the  predominating  spirit  of  rivalry,  and  guided  by  the  same 

S.  Rep.  46 4 


50  INTERSTATE    COMMERCE. 

policy,  have  in  many  instances  constructed  new  feeders  through  terni 
tory  already  supplied  with  all  the  transportation  facilities  the  traffic 
would  legitimately  support.  In  this  way  great  wrongs  have  manifestly 
been  committed,  for  which  the  railroads  themselves  have  been  directly 
responsible.  Not  ouly  have  the  expenditures  upon  such  uncalled-for 
lines  robbed  investors  of  their  legitimate  profits  upon  investments  pre- 
viously made  in  the  lines  pursuing  this  policy  of  reckless  extension,  but 
the  addition  of  every  unnecessary  road  has  imposed  an  unjust  burden 
upon  the  public. 

It  cannot  be  claimed  that  there  is  any  obligation  on  the  part  of  the 
community  to  support  an  unnecessary  road,  but  when  once  it  is  put  in 
operation  and  fastened  upon  the  public  it  will  contrive  thereafter  to 
live  at  its  expense.  It  is  contended  by  railroad  men  that  in  such  cases 
the  losses  fall  entirely  upon  the  railroads ;  that  there  is  only  so  much 
business  to  be  carried,  that  competition  keeps  the  rates  down,  and  that 
even  where  the  business  is  divided  and  carried  at  greater  expense  the 
people  pay  no  more  than  before. 

This  may  be  partially  true,  but  the  fact  still  remains  that  the  con- 
struction of  every  new  road  imposes  an  additional  burden  or  tax  upon 
commerce  for  its  maintenance,  and  the  people  have  a  right  to  demand 
protection  against  the  imposition  of  such  a  burden  without  any  benefits 
being  conferred  in  return  by  way  of  compensation. 

It  is  evident  that  the  cost  of  moving  the  traffic  between  two  given 
points  will  be  greater  when  the  business  must  meet  the  expense  of 
maintaining  and  operating  several  lines  than  when  divided  among 
whatever  lesser  number  may  be  able  to  furnish  all  the  facilities  for 
transportation  required.  The  cost  of  doing  the  business,  without  any 
regard  to  making  profits,  is  necessarily  increased  when  two  organiza- 
tions, two  working  forces,  and  two  lines  of  road  are  maintained  and  all 
the  facilities  are  duplicated  to  do  the  work  which  one  organization  can 
do.  And  while  the  addition  of  a  line  that  is  not  needed  may  not,  per- 
haps, result  in  higher  rates  being  charged,  it  is  none  the  less  a  burden 
upon  the  community  if  it  increases  the  cost  of  operating  lines  previously 
existing,  and  thereby  prevents  them  from  providing  improved  facilities 
or  from  making  the  reductions  in  rates  which  the  public  would  other- 
wise be  entitled  to  secure  as  business  increased.  These  propositions 
would  be  self-evident  if  all  the  roads  in  the  United  States  belonged  to 
and  were  operated  by  the  Government,  and  would  be  equally  clear  if 
they  were  all  operated  in  the  public  interest,  as  they  should  be. 

In  searching  for  a  remedy  for  the  evils  resulting  from  unrestricted 
construction  our  attention  is  naturally  invited  to  the  English  system. 
The  restrictions  placed  upon  railroad  building  in  England  have  not 
hindered  the  steady  growth  of  the  system,  but  have  tended  rather  to 
secure  better  roads  and  better  management.  As  is  known,  the  con- 
struction of  an  English  railway  cannot  be  entered  upon  without 
thorough  investigation  as  to  its  plans  and  purposes,  the  financial  re- 
sponsibility of  its  promoters,  public  discussion  of  the  project  in  all  its 
bearings,  and  the  approval  of  Parliament.  If  the  proposed  enterprise 
is  opposed,  as  it  is  likely  to  be,  a  costly  contest  follows  continuing, 
perhaps,  through  several  sessions.  Every  community,  property  owner, 
or  person  affected  has  an  opportunity  to  be  heard,  experts  are  em- 
ployed on  both  sides,  and  the  result  is  an  exhaustive  inquiry  into  the 
merits  of  the  projected  undertaking.  This  system  is  so  expensive  that 
it  has  been  asserted  that  10  per  cent,  of  the  capital  of  the  English  rail- 
ways has  been  expended  in  parliamentary  contests,  but  it  has  unmis- 
takable advantages  in  restricting  purely  speculative  enterprises,  and  in 


INTERSTATE    COMMERCE.  51 

compelling  projectors  to  establish  affirmatively  tlieir  own  responsibility 
and  good  faith  and  the  merits  of  their  enterprises. 

Ihe  adoption  of  such  a  system  in  the  United  States  is  not  practicable, 
although  there  are  many  important  considerations  demanding  the 
placing  of  greater  restrictions  upon  the  starting  of  railroad  enterprises, 
and  the  requirement  of  proofs  of  responsibility  and  good  faith  from  their 
promoters.  Proper  legislation  by  the  States  would  go  far  to  remedy 
the  evils  to  which  attention  has  been  called,  such  as  the  adoption  of 
measures  which  would  at  least  compel  those  proposing  to  build  railroads 
to  build  them  with  their  own  money.  This  could  be  accomplished  by 
providing  that  no  corporation  should  have  the  right  to  commence  the 
construction  of  a  railroad  until  it  had  furnished  proof  to  some  desig- 
nated authority  that  a  reasonable  per  cent,  of  its  estimated  cost  had 
been  provided.  This  would  certainly  be  wiser  than  to  allow,  as  is  now 
done  in  many  States,  the  incorporation  of  railroad  companies  under 
general  law  by  parties  who  have  only  to  pay  the  fees  of  tiling  and  re- 
cording to  acquire  the  right  to  condemn  private  property  and  the  power 
to  materially  affect  the  value  of  existing  lines,  when  the  only  purpose 
is  to  further  private  speculation,  and  the  necessary  result  will  be  a 
public  injury. 

The  importance  of  affording  better  guarantees  to  the  investment  of 
capital  in  future  legitimate  railroad  enterprises,  and  of  maintaining  the 
credit  of  American  railway  securities  at  home  and  abroad,  naturally 
suggest  the  inquiry  whether  any  remedy  for  the  evils  that  have  been 
pointed  out  lies  in  the  hands  of  Congress.  The  peculiarity  of  the  sit- 
uation is  that,  so  far  as  concerns  the  charter  restrictions  which  have 
been  suggested,  the  jurisdiction  of  the  States  extends  over  both  the 
State  and  the  interstate  roads ;  and  the  committee,  after  due  consideration 
of  the  questions  involved,  does  not  believe  that  Congress,  by  virtue  of  its 
undoubted  power  to  regulate  interstate  transportation  can,  without  in- 
terference with  the  rights  of  the  States,  exercise  any  direct  or  indirect 
control  over  the  granting  of  charters  to  railroads  by  the  States  or  over 
the  other  proceedings  preliminary  to  their  construction. 

FICTITIOUS  CAPITALIZATION. 

Another  serious  evil  incident  to  the  prevailing  methods  of  railroad 
management,  and  one  which  is  especially  conspicuous  in  connection  with 
the  construction  of  unnecessary  roads,  is  fictitious  capitalization,  popu- 
larly known  as  stock  watering.  This  pernicious  practice  has  unques- 
tionably done  more  to  create  and  keep  alive  a  popular  feeling  of  hostil- 
ity against  the  railroads  of  the  United  States  than  any  other  one  cause. 
It  has  been  the  favorite  device  adopted  to  illegitimately  increase  the 
profits  of  these  corporations  and  their  speculative  manipulators,  and 
has  been  made  use  of  to  cover  up  and  conceal  from  the  knowledge  of 
the  public  the  returns  really  received  from  the  capital  actually  invested. 
It  has  encouraged  extravagance  and  corruption;  has  been  made  the 
means  of  swindling  innocent  investors  out  of  millions  of  dollars;  has 
promoted  stock  gambling,  and,  worst  of  all,  has  imposed  a  serious  and 
continuous  illegitimate  burden  upon  commerce.  In  the  words  of  Mr. 
F.  B.  Thurber,  ''Excessive  capitalization  operates  as  a  mortgage  upon 
the  industry  of  the  country,  and  as  a  machinery  for  concentrating  wealth 
in  few  hands  wherever  the  power  exists  to  impose  rates  for  transporta- 
tion which  will  yield  dividends  on  watered  stock." 

By  reference  to  the  statement  of  Mr.  Poor  (testimony,  p.  228),  the 
extent  to  which  this  vicious  practice  has  been  indulged  in  will  be  better 


52  INTERSTATE    COMMERCE. 

understood.  Mr.  Poor  estimates  that  of  the  capital  stock,  bonds,  and 
other  evidences  of  indebtedness  issued  by  the  railroads  of  the  Uiiited 
States,  amounting  in  the  aggregate  at  the  close  of  1883  to  $7,495,471,311, 
at  least  $2,000,000,000  represents  what  is  known  as  "watered  stock." 
Others  have  pronounced  this  estimate  too  low  ;  and  attention  is  invited 
to  the  statements  of  Messrs.  Poor,  Sterne  (p.  79),  Thurber  (pp.  274  and 
295),  O'Donell  (p.  46),  and  King  (p.  130),  for  illustrations  of  the  effects 
of  this  practice. 

As  the  committee  is  not  prepared  to  suggest  any  method  by  which 
Congress  can  directly  regulate  such  financial  operations  on  the  part  of 
railroads  chartered  by  the  States,  it  is  only  deemed  necessary  at  this 
time  to  call  attention  to  the  need  of  State  legislation  calculated  to  effect- 
ively check  such  speculative  transactions. 

The  committee  is,  however,  of  the  opinion  that  Congress  can  aid  ma- 
terially in  bringing  about  this  much  to  be  desired  result  by  causing  the 
financial  operations  of  all  interstate  roads  to  be  thoroughly  investigated 
and  by  requiring  of  them  such  detailed  reports  as  will  accurately  ex- 
hibit their  actual  condition  and  the  net  results  of  their  business.  -There 
is  no  uniformity  in  their  methods  of  book-keeping  or  any  guarantee 
that  the  reports  published  honestly  represent  their  true  financial  condi- 
tion, nor  can  there  be  until  they  are  required  to  adopt  a  uniform  system 
of  accounts,  and  provision  is  made  for  a  thorough  investigation  and 
analysis  of  their  accounts  by  trained  experts  representing  the  public. 
The  publicity  which  would  attend  such  investigations  and  reports 
would  of  itself  have  a  potential  influence  in  preventing  illegitimate 
transactions  in  the  future,  and  would  awaken  a  public  sentiment  strong 
enough  to  secure  whatever  State  legislation  might  be  found  necessary. 

The  committee  further  believe  that  such  investigations  should  be 
conducted  under  the  direction  of  a  national  railroad  commission,  and 
that  the  importance  of  this  work  furnishes  a  strong  argument  in  favor 
of  the  creation  of  such  a  commission. 


THE  VARIOUS  METHODS  OF  RAILROAD  REGULATION. 

Various  methods  of  compelling  the  performance  by  railroads  of  their 
public  obligations  and  of  preventing  and  correcting  abuses  in  their 
dealings  with  the  community  have  been  tested  by  other  nations  and  by 
the  States  of  the  Union,  and  it  will  be  instructive  to  review  these  efforts 
at  regulation  before  entering  upon  the  consideration  of  the  necessity 
for  Congressional  action. 

The  introduction  of  the  railroad  brought  into  the  world  an  untried 
and  powerful  force,  the  possibilities  of  which  are  even  yet  butimperfectly 
understood,  and  its  operation  brought  important  questions  which  of 
necessity  were  met  and  decided  blindly,  without  the  advantage  of  prec- 
edent or  experience,  and  without  any  adequate  appreciation  of  the 
unforeseen  and  manifold  changes  that  have  since  resulted  through  its 
agency.  During  what  maybe  termed  the  era  of  construction  the  chief 
consideration  that  influenced  the  people  and  the  legislators  of  Great 
Britain  and  America  was  how  to  secure  railroads,  not  how  to  control 
them.  It  was  many  years  before  the  necessity  of  control  became  ap- 
parent  or  the  matters  over  which  control  was  needed  became  under- 
stood. The  construction  of  railroads  was  at  first  authorized  by  special 
charters.  When  the  first  charters  were  granted  it  was  supposed  that 
the  railroad  would  be  merely  a  modification  of  or  an  improvement  upon 
the  public  highway ;  that  it  would  simply  furnish  a  line  of  comuiunica- 


INTERSTATE    COMMERCE.  53 

(•ion  open  to  all.  like  a  on  mil.  and  that  it  could  be  used  at  pleasure,  as 
a  water  route  is  used,  by  all  who  might  be  disposed  to  plaoe  upoii  it 
means  of  carriage.  H  was  also  supposed  that  the  railroad  would  be 
used  only  for  the  carriage  of  passengers  and  not  for  the  transportation 
.of  freight,  except  perhaps  to  a  limited  extent.  How  thoroughly  this 
misconception  prevailed  is  illustrated  by  a  report  made  to  the  New  York 
legislature  as  late  as  1835,  in  which  the  four  leading  engineers  of  that 
State  expressed  the  following  remarkable  opinion: 

The  railroads  admit  of  advantageous  use  in  districts  where  canals,  for  the  want  of 
water,  would  be  impracticable.  They  will  probably  be  preferred  where  high  veloci- 
ties are  required,  and  for  the  transportation  of  passengers,  and,  under  some  circum- 
stances, for  the  conveyance  of  light  goods. 

The  supposed  analogy  between  the  railroad  and  the  public  highway  in 
their  relations  to  the  community  gave  direction  to  the  earlier  legislation 
of  England  and  the  United  States.  And  even  when  the  discovery  was 
made  that  there  was  an  element  of  monopoly  inseparably  connected 
with  the  business  of  transportation  by  rail,  the  earlier  efforts  at  regula- 
tion were  directed  at  the  limitation  of  the  profits  of  the  corporation 
rather  than  towards  the  protection  of  the  shipper. 

The  widely  varying  methods  which  have  been  adopted  by  different 
Governments  in  dealing  with  the  problems  of  railway  development  and 
regulation  may  be  grouped  as  follows : 

1.  The  policy  of  private  ownership  and  private  management — 

(a)  Without  interference  or  supervision  by  the  Government. 

(I)  Subject  to  compulsory  and  penal  legislation  for  control  and 
regulation  of  rates. 

(c)  Subject  to  investigation  by  a  commission  with  advisory  powers, 
and  depending  largely  upon  public  opinion  for  the  enforce- 
ment of  its  recommendations. 

(<?)  Subject  to  investigation  by  a  commission  with  power  to  fix 
and  regulate  rates. 

2.  Exclusive  State  ownership  and  Government  management. 

3.  State  ownership  and  private  management  under  Government  super- 

vision and  control. 

4.  Partial  State  ownership  and  management  in  competition  with  pri- 

vate ownership  and  management. 

Regulation  through  state  ownership  has  been  practically  unknown  in 
the  United  States.  It  is  of  foreign  origin  and  is  foreign  to  the  charac- 
ter of  our  institutions.  Tine  time  may  come  when  the  people  of  the 
United  States  will  be  forced  to  consider  the  advisability  of  placing  the 
railways  of  the  country  completely  under  the  control  of  the  General 
Government,  as  the  postal  service  is,  and  as  many  believe  the  telegraph 
service  should  be.  This  would  seem  to  be  the  surest  method  of  secur- 
ing the  highest  perfection  and  greatest  efiiciency  of  the  railroad  system 
in  its  entirety,  and  the  best  method  of  making  it  an  harmonious  whole 
in  its  operation  and  of  bringing  about  that  uniformity  and  stability  of 
rates  which  is  the  greatest  need  of  trade  and  commerce.  But  the  dan- 
gers to  be  apprehended  from  the  giving  of  such  vast  additional  power 
to  the  Government  will  always  prove  a  formidable  barrier  to  the  adop- 
tion of  such  a  policy,  and  this  committee  sees  no  necessity  for  consider- 
ing its  advantages  or  disadvantages  until  other  methods  of  regulation 
more  American  in  spirit  have  at  least  been  given  a  trial  and  have  proved 
unsatisfactory.  Nor  i>s  it  deemed  important  to  investigate  in  detail  the 
experience  of  those  European  nations  in  which  the  policy  of  State  own- 
ership or  management  in  one  form  or  another  has  prevailed. 


54  ,  INTERSTATE    COMMERCE. 

In  those  nations  the  railroad  question  has  presented  itself  under  dif- 
ferent conditions,  and  has  admitted  of  methods  of  regulation  wholly 
impracticable  in  the  United  States,  by  reason  of  the  marked  differences 
in  the  organization  of  the  machinery  of  government  and  in  the  customs, 
temper,  and  habits  of  thought  of  the  people.  The  English  railroad  sys- 
tem, however,  has  grown  up  under  conditions  more  nearly  resembling 
those  prevailing  upon  this  side  of  the  Atlantic  than  those  existing  in 
any  other  country.  It  has  been  developed  under  the  operation  of  the 
principle  of  private  ownership  and  management  subject  to  Parliamentary 
control,  and  substantially  all  of  the  methods  of  regulation  .proposed 
in  this  country  had  first  been  tested  there.  The  English  people  early 
undertook  the  legislative  regulation  of  their  railroads.  They  have  been 
considerably  in  advance  of  us  in  dealing  with  the  difficulties  that  have 
been  encountered,  and  have  given  the  subject  no  little  attention. 

For  these  reasons  the  experience  of  England  is  of  more  interest  and 
value  to  us  than  that  of  those  nations  in  which  the  policy  of  state  own- 
ership has  been  more  or  less  generally  adopted,  and  these  reasons  seem 
to  warrant  a  glance  at  the  efforts  which  have  been  made  in  that  country 
for  more  than  fifty  years  to  unravel  the  complications  of  the  railroad 
question,  and  to  hit  upon  a  satisfactory  method  of  enforcing  the  per- 
formance of  public  obligations  and  of  adjusting  the  relations  between 
the  railroads  and  the  people.  The  information  on  these  subjects  here- 
with submitted  is  based  largely  upon  the  statements  contained  in  the 
numerous  reports  which  have  been  made  by  Parliamentary  committees. 


THE  COUESE  OF  RAILROAD  LEGISLATION  IN  ENGLAND- 
WORKINGS  OF  THE  ENGLISH  COMMISSION— THE  PRES- 
ENT STATUS  OF  AFFAIRS. 

When  railroad  construction  began  in  England  that  country  already 
had  quite  a  complete  system  of  canals,  with  which  the  new  methods  of 
transportation  came  immediately  into  active  competition.  By  the  char- 
ters first  granted  the  railroads  were  required  to  admit  to  their  lines  the 
cars  and  locomotives  of  other  companies  and  individuals,  and  the  acts 
usually  prescribed  the  maximum  tolls  to  be  charged  for  such  service. 
These  were  regulations  which  it  had  been"  found  necessary  to  apply  to 
the  canals,  in  the  management  of  which  abuses  had  been  complained 
of  somewhat  similar  to  those  that  afterwards  characterized  the  manage- 
ment of  railways.  Competition  between  the  different  carriers  who  were 
expected  to  use  the  route  was  relied  on  to  secure  to  the  public  needful 
facilities  and  fair  rates  under  these  provisions.  But  this  was  not  the 
result,  and  within  ten  years  after  the  opening  of  the  first  railway  it  was 
generally  recognized  that  a  railroad  must  be  to  some  extent  a  monopoly, 
because  the  service  to  be  performed  was  of  such  a  nature  that  the  high- 
est degree  of  efficiency  would  be  attained  and  the  convenience  of  the 
public  would  be  best  subserved  by  committing  the  work  to  but  one  car- 
rier. It  is  worthy  of  remark  that  even  at  that  early  period  in  railroad 
history  the  future  direction  of  the  development  of  the  system  was  clearly 
foreseen  by  at  least  one  man. 

In  the  words  of  Mr.  Sterne : 

I  have  in  hand  a  speech  delivered  in  the  House  of  Commons  by  Mr.  James  Morrison 
on  the  17th  of  May,  1836.  Mr.  Morrison  was  the  A.  T.  Stewart  of  England,  and  died 
leaving  a  fortune  of  four  or  five  million  pounds  sterling.  Ho  was  a  member  of  Parlia- 
ment, and  he  told  his  associates,  as  early  as  1-S3G,  that  their  maximum  rates  would  be 


INTERSTATE    COMMERCE.  55 

of  no  value,  that  the  economies  of  railway  transportation  from  decade  to  decade,  and 
.he  improvement  of  railway  transportation  and  the  development  of  railway  traffic, 
would  make  their  maximum  rates  ridiculously  high,  and  would  be  an  excuse  for  ex- 
tortion in  individual  instances.  Indeed,  the  clear  understanding  which  he  had  of  the 
railway  problem,  as  early  as  1836,  was  absolutely  marvelous.  But  no  attention  was 
paid  to  his  recommendation  ;  it  was  voted  down.  They  recognize  now,  however,  that 
Mr.  Morrison  was  one  of  the  few  men  who  then  foresaw  the  railway  problems  of  the 
present  as  they  are  now  developing.  (Testimony,  p.  70.) 

The  new  questions  raised  by  this  discovery  of  the  element  of  monop- 
oly in  railroad  transportation  were  considered  by  a  Parliamentary  com- 
mittee, of  which  Sir  Robert  Peel  was  a  member,  and  which  reported  in 
1840  that  the  method  of  competition  which  has  been  described  was  im- 
practicable; that  monopoly  upon  each  line  was  inevitable;  that  a  single 
management  of  each  railway  was  expedient,  and  that  these  changed 
conditions  made  necessary  the  protection  of  the  public  interests,  for 
the  reason  "  that  the  interest  of  the  companies  was,  to  a  certain  extent 
only,  that  of  the  public.*7  At  the  same  time  the  committee  expressed 
the  belief  that  "an  enlightened  view  of  their  own  interests  would 
always  compel  managers  of  railroads  to  have  due  regard  to  the  general 
advantage  of  the  public." 

It  was  supposed  that  the  principles  of  free  trade  would  apply  in  the 
construction  and  operation  of  railroads,  and  it  was  quite  naturally  ex- 
pected that  this  business  would  be  subject  to  the  same  natural  laws  of 
competition  that  governed  and  regulated  other  commercial  enterprises 
and  operations. 

While  these  theories  held  sway  parallel  lines  were  looked  te  as  an 
effective  means  of  regulation.  Parliament  encouraged  the  building  of 
competing  lines,  and  this  policy  brought  on  a  period  of  great  activity 
in  railroad  construction  and  speculation.  But  the  effects  of  competi- 
tion between  different  lines  were  not  what  had  been  anticipated,  and  at- 
tracted so  much  attention  that  in  1844  another  committee,  headed  by 
Mr.  Gladstone,  was  appointed,  which  took  under  consideration  the  ques- 
tion of  competition  and  management,  and  submitted  in  all  five  reports. 
The  second  report  recommended  the  appointment  by  Parliament  of  pri- 
vate bill  committees  to  examine  into  the  propriety  of  proposed  competing 
schemes,  and  the  third  expressed  the  following  conclusions : 

That  the  indefinite  concessions  made  to  the  earlier  companies  had  be- 
come unnecessary  ;  that  competition  between  railways  would  do  more 
harm  to  the  companies  than  good  to  the  public;  that  the  effect  of  mo- 
nopoly upon  the  public  directly  and  upon  the  railways  indirectly  ought 
to  be  guarded  against,  and  that  in  authorizing  new  lines  Parliament 
should  reserve  certain  powers  to  be  exercised  after  a  time. 

The  idea  of  state  ownership  as  an  effective  means  of  regulation  capti- 
vated this  committee,  which  became  convinced  that  the  people  must  in 
one  way  or  another  pay  for  whatever  transportation  facilities  they  en- 
joyed, and  that  the  main  question  was  how  to  secure  by  legislation  "  the 
greatest  amount  of  accommodation  at  the  least  cost."  And  the  general 
conclusion  reached  by  the  committee  in  its  final  report  was  that  regula- 
tion was  to  be  depended  upon  rather  than  competition.  These  reports 
led  to  the  passage  in  1844  of  a  law  looking  to  the  ultimate  acquisition 
of  the  railways  by  the  Government,  and  prescribing  the  terms  of  their 
purchase  at  the  expiration  of  twenty -one  years  should  that  policy  be  de- 
cided upon. 

During  this  interval  an  other  unexpected  characteristic  of  railway  man- 
agement came  prominently  into  notice.  The  addition  of  too  many  com- 


66  INTERSTATE    COMMERCE. 

peting  lines  developed  a  tendency  toward  amalgamation,  and  verified 
George  Stephenson's  axiomatic  statement  that  u  Where  combination  is 
possible,  competition  is  impossible."  Accordingly,  in  a  report  made,  by 
the  Board  of  Trade  of  the  United  Kingdom  relative  to  the  numerous 
amalgamations  proposed  in  1845,  it  was  recommended  that  amalgama- 
tions should  not  be  permitted  by  Parliament  when  the  purpose  was  to 
avoid  competition, 'but  only  between  branches  and  main  lines  or  when 
continuous  lines  were  formed,  and  then  only  after  due  consideration. 

Another  committee,  appointed  in  1846,  discovered  that  where  amalga- 
mations had  not  been  authorized  the  roads  often  reached  the  same 
end  through  private  working  arrangements,  some  of  which  virtually 
amounted  to  consolidation,  and  that  they  avoided  competition  wher- 
ever practicable.  On  the.recommendation  of  this  committee  that  it  was 
necessary  to  establish  a  department  of  tjie  Government  to  take  "super- 
vision of  the  railways  and  canals,  with  full  power  to  enforce  such  regu- 
lations as  may  from  time  to  time  appear  indispensable  for  the  accom- 
modation and  general  interests  of  the  public,"  the  railway  commission 
was  created,  but  was  only  allowed  to  exist  until  1851,  when  its  duties 
were  transferred  to  the  Board  of  Trade.  Meantime  the  efforts  at  amal- 
gamation grew  more  and  more  determined,  and  the  process  went  on  by 
the  consent  of  Parliament,  notwithstanding  all  the  restrictions  imposed 
upon  it,  and  despite  the  growing  public  dread  of  its  effects. 

Still  another  committee  inquired  into  this  vexed  question  of  amalga- 
mation, and  its  elaborate  reports  upon  the  subject  brought  about  the 
passage  of  the  u  canal  and  railway  traffic  act"  of  1854,  usually  known 
as  the  Cardwell  act,  which  has  been  the  model  of  much  of  our  State 
legislation  against  unjust  discrimination.  The  purpose  of  the  act  was 
to  prevent  undue  preferences,  and  tocornpel  interchange  of  traffic  between 
railways  and  between  railways  and  canals  upon  equal  terms.  (See  tes- 
timony, p.  58.)  This  act  established  two  important  principles  that  have 
since  been  generally  followed.  One  was  that  every  company  should  be 
compelled  to  afford  the  public  the  full  advantages  of  the  convenient 
interchange  of  traffic  from  one  line  to  another.  The  second  was  that 
the  companies  were  under  obligations  to  and  should  be  required  to 
make  equal  rates  to  all  under  the  same  circumstances. 

The  time  when  the  state  could  take  possession  of  the  roads  came  in 
1865,  and  a  royal  commission  was  appointed,  which  gathered  a  great 
deal  of  evidence  and  went  into  the  questions  presented  quite  fully. 
The  most  important  conclusions  of  the  commission  have  been  sum- 
marized as  follows : 

That  it  is  not  expedient  for  the  Government  to  avail  itself  of  its  reserved  right  to 
purchase  railways. 

That  Parliament  should  not  interfere  with  the  incorporation  and  financial  affairs 
of  railway  companies,  leaving  such  matters  to  be  dealt  with  under  the  "joint  stock 
companies  act,"  limiting  its  own  action  to  regulating  the  construction  of  the  lines 
and  the  relations  between  the  public  and  the  companies  so  incorporated. 

That  railway  companies  should  be  bound  to  run  at  least  two  trains  a  day  for  third- 
class  passengers. 

That  it  would  be  "  inexpedient,  even  if  it  were  practicable,  to  adopt  any  legisla- 
tion which  would  abolish  the  freedom  which  railway  companies  enjoy  of  charging 
what  sum  they  deem  expedient  within  their  maximum  rates,  when  properly  denned, 
limited  as  that  freedom  is  by  the  traffic  act." 

That  railway  companies  should  be  required  to  make  stated  reports  to  the  board  of 
trade  in  such  form  as  {he  board  may  require. 


INTERSTATE    COMMERCE.  57 

Finally,  in  1872,  a  joint  select  committee  was  appointed  and  made  a 
most  thorough  investigation  of  the  railroad  question.  The  report  of 
this  committee  passed  in  review  the  history  of  England's  legislation 
during  its  experience  of  forty  years.  It  was-  shown  that  little  had 
been  accomplished,  although  thirty-three  hundred  acts  had  been  passed 
and  an  expenditure  of  some  £80,000,000  had  been  imposed  upon  the 
companies.  It  was  also  shown  that  the  process  of  amalgamation  had 
gone  on  with  little  regard  to  the  recommendations  of  committees,  com- 
missions, and  Government  departments,  and  the  result  was  that  "while 
committees  and  commissions  carefully  chosen  have,  for  the  last  thirty 
years,  clung  to  one  form  of  competition  after  another,  it  has,  neverthe- 
less, become  more  and  more  evident  that  competition  must  fail  to  do  for 
railways  what  it  does  for  ordinary  trade ;  and  that  no  means  have  yet 
been  devised  by  which  competition  can  be  permanently  maintained." 
Nor  did  the  committee  see  any  reason  "  to  suppose  that  the  progress  of 
combination  has  ceased,  or  that  it  will  cease  until  Great  Britain  is  di- 
vided between  a  small  number  of  great  companies."  At  the  same  time, 
however,  the  committee  made  it  evident  that  in  the  past  amalgamation 
"  had  not  brought  with  it  the  evils  that  were  anticipated,  but  that  in 
any  event  long  and  varied  experience  had  fully  demonstrated  the  fact 
that  while  Parliament  might  hinder  and  thwart,  it  could  not  prevent  it, 
and  it  was  equally  powerless  to  lay  down  any  general  rules  determining 
its  limits  or  character." 

Other  important  conclusions  were  reached  by  the  committee  as  fol- 
lows : 

That  competition  between  railways  existed  only  to  a  limited  extent  and  could  not 
l)e  maintained  by  legislation. 

That  combination  was  increasing  and  likely  to  increase. 

That  competition  by  sea  should  be  secured  by  preventing  railway  companies  from 
getting  control  over  public  harbors. 

That  canals  were  of  advantage  in  securing  competition  ;  that  their  facilities  for 
through  shipments  should  be  increased,  and  that  no  canal  should  be  placed  directly 
or  indirectly  under  the  control  of  any  railway  company. 

That  a  system  of  equal  mileage  rates,  or  charges  in  proportion  to  distance,  was  inex- 
pedient and  impracticable  for  the  following  reasons: 

(a)  It  would  prevent  railway  companies  from  lowering  their  fares  and  rates,  so 
as  to  compete  with  traffic  by  sea,  by  canal,  or  by  a  shorter  or  otherwise  cheaper 
railway,  and  would  thus  deprive  the  public  of  the  benefit  of  competition,  and  the 
company  of  a  legitimate  source  of  profit. 

(6)  It  would  prevent  railway  companies  from  making  perfectly  fair  arrange- 
ments for  carrying  at  a  lower  rate  than  usual  goods  brought  in  larger  and  con- 
stant quantities,  or  for  carrying  for  long  distances  at  a  lower  rate  than  for 
short  distances. 

(c)  It  would  compel  a  company  to  carry  for  the  same  rate  over  a  line  which  has 
been  very  expensive  in  construction,  wr  which,  from  gradients  or  otherwise,  is 
very  expensive  in  working,  at  the  same  rate  at  which  it  carries  over  less  expens- 
ive lines. 

In  short,  to  impose  equal  mileage  on  the  companies  would  be  to  deprive  the 
public  of  the  benefit  of  much  of  the  competition  which  now  exists,  or  has  ex- 
isted, to  raise  the  charges  on  the  public  in  many  cases  where  the  companies  now 
find  it  to  their  interest  to  lower  them,  and  to  perpetuate  monopolies  in  carriage, 
trade,  and  manufacture  in  favor  of  those  rates  and  places  which  are  nearest  or 
least  expensive,  where  the  varying  charges  of  the  companies ^iow  create  compe- 
tition. And  it  will  be  found  that  the  supporters  of  equal  mileage,  when  pressed, 


58  INTERSTATE    COMMERCE. 

often  really  mean,  not  that  the  rates  they  pay  themselves  are  too  high,  but  that 
the  rates  that  others  pay  are  too  low. 

Pressed  by  these  difficulties,  the  proposers  of  equal  mileage  have  admitted 
that  there  must  be  numerous  exceptions,  e.  g.,  where  there  is  sea  competition  (i.  e., 
at  about  three-fifths  of  the  railway  stations  of  the  United  Kingdom),  where  low 
rates  for  long  distances  will  bring  a  profit,  or  where  the  article  carried  a*  V>w 
rates  is  a  necessary,  such  as  coal.  It  is  scarcely  necessary  to  observe  that  such 
exceptions  as  these,  whilst  inadequate  to  meet  all  the  various  cases,  destroy  the 
value  of  "equal  mileage  "as  a  principle,  or  the  possibility  of  applying  it  asa  gen- 
eral rule. 

That  the  fixing  of  legal  rates  based  upon  the  actual  cost  of  the  railways  and  calcu- 
lated to  yield  only  a  fair  return  upon  such  cost  was  impracticable. 

That  the  plan  of  maxima  charges  had  been  a  failure,  and  that  such  rates  afforded 
little  real  protection  to  the  public,  since  they  were  always  fixed  so  high  that  sooner 
or  later  it  became  the  interest  of  the  companies  to  carry  at  lower  rates. 
That  there  should  be  publicity  of  rates  and  tolls. 

That  a  new  tribunal  was  needed  to  take  supervision  of  the  transportation  interests 
of  the  kingdom,  and  with  authority  to  enforce  the  laws  relating  to  railways  and 
canals,  to  hear  complaints  and  adjust  differences,  and  to  advise  Parliament  upon 
questions  of  railway  legislation. 

This  investigation,  by  making  plain  the  lessons  taught  by  many  years 
of  experience,  was  especially  valuable  in  at  least  bringing  about  a  gen- 
eral recognition  of  the  fact  that  the  relations  between  the  railways  and 
the  community  require  special  treatment  and  cannot  be  defined  or  gov- 
erned in  accordance  with  the  natural  laws  regulating  ordinary  commer- 
cial intercourse.  It  was  evident  that  the  policy  adopted  by  the  com- 
mittee, if  followed  out  to  its  conclusion,  might  lead  in  time  to  a  few 
great  corporations  obtaining  an  absolute  monopoly  of  the  business  of 
transportation  by  rail  throughout  the  entire  kingdom,  and  even  to  finally 
placing  the  control  of  these  most  important  interests  in  the  hands  of  a 
small  number  of  individuals,  whose  powers  might  become  greater  than 
those  of  the  Government  itself.  Nevertheless,  without  being  able  to 
indicate  how  the  relations  between  the  Government  and  these  great 
monopolies  would  or  should  ultimately  be  adjusted,  the  committee  did 
not  appear  to  believe  that  the  time  was  ripe  to  check  the  development 
of  the  railway  system  of  Great  Britain  by  extreme  measures,  and  was 
content  to  recommend  the  establishment  of  a  special  tribunal  as  the 
first  step  to  be  taken  in  inaugurating  the  policy  of  special  treatment 
which  it  had  become  apparent  must  be  adopted  to  meet  the  exigencies 
of  the  situation. 

This  recommendation  was  complied  with  by  the  creation  of  what  is 
known  as  the  railway  commission  of  1873,  which  was  at  first  given  a 
tenure  of  but  five  years,  but  which  has  since  been  continued.  This  tribu- 
nal is  chiefly  judicial  in  character;  it  is,  in  fact,  a  separate  railway  court, 
composed  of  three  commissioners  or  judges,  and  has  jurisdiction  over 
all  matters  in  relation  to  the  interchange  of  traffic,  and  to  all  contracts 
between  railway  companies,  as  well  as  complaints  of  undue  preferences 
and  of  other  violations  of  railway  laws.  The  most  recent  official  dec- 
laration concerning  this  commission  is  found  in  the  report  of  the  select 
committee  of  twenty-seven  members,  appointed  by  the  House  of  Com- 
mons, in  1882,  to  inquire  into  its  working  and  the  rates  charged  by  rail- 
ways and  canals.  After  an  investigation,  lasting  several  mouths,  this 
committee  reported  that  the  tribunal  should  be  made  permanent  as  well 
as  special,  and  say  : 

The  railway  commission  hrvs,  to  n  great  extent,  been  hindered  in  its  work  by  the 
temporary  character  with  which  it  has  hitherto  been  invested.  At  the  same  time 


INTERSTATE    COMMERCE.  59 

jour  committee  are  convinced  that  the  establishment  of  the  commission  has  been  of 
great  public.advantage,  not  merely  in  causing  justice  to  be  speedily  done  in  those 
cases  which  have  been  brought  before  it,  but  also  in  preventing  differences  from  aris- 
ing as  between  railway  companies  and  the  public.  Its  utility  is  not  to  be  measured 
solely  by  the  instances  in  which  it  has  been  called  upon  to  "  hear  and  determine," 
but  also  by  the  deterrent  aud  controlling  influence  of  its  existence. 

Representatives  of  the  railway  companies,  backed  up  by  legal  gentlemen  of  emi- 
nence, have  urged  upon  your  committee  that  it  is  not  desirable  to  continue  the  spe- 
cial tribunal  in  its  present  form,  but  that  the  court  should  be  reconstituted  by  the 
appointment  of  a  single  judge,  to  be  selected  from  the  bench  or  the  bar,  aided  by 
assessors  wherever  other  than  legal  knowledge  is  required.  From  the  traders  and 
the  general  public,  on  the  other  hand,  no  demand  has  come  for  such  a  change ;  on 
the  contrary,  the  general  tenor  of  their  evidence  exhibits  satisfaction  with  the  serv- 
ices rendered  to  the  public  by  the  existing  railway  commission. 

Accordingly  the  committee  recommended  : 

Thar  tin-  railway  commission  be  made  permanent,  aud  a  court  of  record. 
That  the  powers  and  jurisdiction  of  the  railway  commission  be  extended  to  cover — 
(a)  All  questions  arising  under  the  special  acts  or  the  public  statutes  for  regu- 
lating railway  or  canal  traffic  affecting  passengers  or  goods. 

(6)  The  making  of  orders  which  may  necessitate  the  co-operation  of  two  or 
more  railway  or  canal  companies  within  the  statutory  obligations  of  the  com- 
panies. 

(c)  Power  to  order  through  rates  on  the  application  of  traders,  but  no  such 
order  to  impose  on  a  railway  company  a  rate  lower  than  the  lowest  rate  of  such 
railway  company  for  similar  articles  under  similar  circumstances. 

(d)  The  revision  of  traffic  agreements,  both  of  railways  and  canals,  in  as  large 
a  measure  as  the  powers  formerly  exercised  by  the  board  of  trade. 

(e)  The  granting  of  damages  and  redress  for  illegal  charges  and  undue  prefer- 
ences. 

(/)  The  commissioners  to  have  power,  on  the  joint  application  of  parties,  to  act 
as  referees  in  rating  appeals. 

That  tho  railway  commissioners  should  deliver  separate  judgments  when  not  unan- 
imous. 

One  appeal  to  be  granted  as  of  right  from  the  judgments  of  the  commission,  and 
" prohibition  "  as  well  as  "  certiorari"  to  be  forbidden. 

In  conclusion,  the  committee  "  report  that  on  the  whole  of  the  evidence 
they  acquit  the  railway  companies  of  any  grave  dereliction  of  their 
duty  to  the  public.  It  is  remarkable  that  no  witnesses  have  appeared 
to  complain  of '  preferences '  given  to  individuals  by  railway  companies 
as  acts  of  private  favor  or  partiality,  such  as  were  more  or  less  frequent 
during  the  years  immediately  preceding  the  act  of  1854.  Your  com- 
mittee find  that  the  rates  for  merchandise  on  the  railways  of  the  United 
Kingdom  are,  in  the  main,  considerably  below  the  maxima  authorized 
by  Parliament,  although  these  charges  appear  to  be  higher  for  the 
iouger  distances  than  on  many  continental  lines.  But,  on  the  other 
hand,  the  service  on  our  home  railways  is  performed  much  more  rap- 
idly than  on  the  continent." 

For  later  and  more  complete  information  concerning  the  English  Rail- 
way Commission  than  could  elsewhere  be  obtained  the  committee  is  in- 
debted to  the  recently  published  work  on  "Railroad  Transportation," 
by  Mr.  Arthur  T.  Hadley,  of  New  Haven,  who  has  made  a  very  careful 
study  of  the  K'Tiglish  railway  system  and  legislation.  The  results  of  his 


60  INTERSTATE    COMMERCE. 

investigations  are  herewith  presented  in  condensed  form.     He  states  the 
general  situation  as  to  legislation  in  the  following  paragraphs : 

With  the  act  of  1873  the  general  railroad  legislation  may  be  said  to  have  closed. 
The  movements  which  the  public  had  feared  for  thirty  years  had  now  pretty  much 
expended  their  force.  Amalgamations  which  were  confidently  expected  in  187*2  did 
not  take  place  after  all.  Joint-purse  arrangements  became  less  important  instead  of 
more  important,  hecause  railroads  found  that  they  could  maintain  rates  without 
them. 

It  is  not  exactly  true  to  say  that  "  in  Great  Britain  the  discussion  of  the  railroad 
problem  may  be  considered  as  over  for  the  time  being."  The  railroad  problem  has 
ceased  to  be  a  bugbear  ;  but  it  has  become  all  the  more  a  question  for  practical  dis- 
cussion. Vague  fears  with  regard  to  the  growth  of  the  railway  power  have  given 
place  to  pointed  complaints  as  to  its  abuse  in  individual  instances.  The  period  of 
general  legislation  has  passed.  Mr.  Adams  is  right  in  saying,  "As  a  result  of  forty 
*years  of  experiment  and  agitation  Great  Britain  has  on  this  head  come  back  very 
nearly  to  its  point  of  commencement."  He  is  not  quite  right  in  adding,  "  It  has  set- 
tled down  on  the  doctrine  of  laissez  faire."  It  might  better  be  said  that  it  has  settled 
down  on  the  policy  of  specific  laws  for  specific  troubles. 

After  briefly  mentioning  the  three  experiments  in  the  line  of  railway 
commissions  attempted  in  England,  in  1840, 1844,  and  1846,  Mr.  Hadley 
says : 

We  have  seen  what  were  the  events  which  led  to  the  passage  of  the  regulation  of 
railways  act  in  1873.  The  commission  appointed  under  that  act  was  to  consist  of 
three  members ;  one  of  them  a  railroad  man,  one  a  lawyer.  They  received  a  salary 
of  £3,000  each.  They  were  to  decide  all  questions  arising  under  the  act  of  1854,  and 
subsequent  acts  connected  with  it.  They  were  further  empowered  to  arbitrate  he- 
tween  railroads  in  a  variety  of  cases ;  to  compel  companies  to  make  through  rates 
which  should  conform  to  the  intention  of  the  act  of  1854  ;  to  secure  publicity  of  rates ; 
to  decide  what  constitutes  a  proper  terminal  charge,  and  some  other  less  important 
matters.  On  questions  of  fact  their  decision  was  to  be  final;  on  questions  of  law  it 
was  to  be  subject  to  appeal.  The  railway  commissioners  themselves  were  to  determine 
what  were  questions  of  fact  and  what  were  questions  of  law.  Subsequent  acts  have 
made  hut  slight  changes  in  these  powers. 

The  commission  consisted  of  able  men — Sir  Frederick  Peel,  Mr.  Price,  formerly  of 
the  Midland  Railway,  and  Mr.  Macnamara;  the  last-named  died  in  1877,  and  was 
succeeded  hy  Mr.  A.  E.  Miller.  They  went  to  work  with  energy,  and  in  a  spirit 
which  promised  to  make  the  experiment  a  signal  success.  And  it  was  at  first  sup- 
posed to  be  such  a  success.  People  judged  hy  the  reports  of  the  commission  itself; 
and  they  were  the  more  prone  to  believe  these  reports  because  it  was  so  desirable  to 
find  an  easy  solution  of  perplexing  questions  of  railroad  policy.  Mr.  Adams,  writing 
in  1878,  said,  "  The  mere  fact  that  the  tribunal  is  there  ;  tbat  a  machinery  does  exist 
for  the  prompt  and  final  decision  of  that  class  of  questions,  puts  an  end  to  them. 
They  no  longer  exist."  That  represented  the  general  public  opinion  on  the  subject  at 
the  time ;  it  represents  the  general  impression  in  America  down  to  the  present  time. 

In  1878,  the  very  year  when  Mr.  Adams  wrote,  the  original  term  of  the  commission 
expired.  People  supposed  that  it  would  be  made  permanent.  Instead  of  that  the 
renewals  have  been  for  much  shorter  periods,  leaving  the  commissioners  a  precarious 
tenure,  and  showing  dissatisfaction  somewhere. 

A  Parliamentary  investigation  on  railroad  rates  in  1881-'82  showed  the  grounds  of 
dissatisfaction  only  too  clearly.  The  testimony  revealed  a  state  of  things  almost 
unsuspected  by  the  general  public,  and  giving  an  entirely  different  explanation  of 
the  fact  that  the  commissioners  had  so  few  cases  to  deal  with.  The  substance  is  that 
the  power  of  the  commission  satisfies  nobody.  It  has  power  enough  to  auoioy  the 
railroads,  and  not  power  enough  to  help  the  public  efficiently. 


INTERSTATE    COMMERCE.  61 

The  railway  commission  was  a  court,  not  an  executive  body,  but  to  all  intents 
and  purposes  a  court  of  1  aw.  And  in  establishing  this  new  court,  in  addition  to  those 
already  existing,  Parliament  had  two  ends  in  view:  (1)  To  have  a  tribunal  which 
would  and  could  act  when  others  would  or  could  not.  (2)  To  avoid  the  expense,  de- 
lay, and  vexation  incident  to  litigation  under  the  old  system.  Neither  end  Was  well 
fulfilled. 

(1)  The  commission  could  not  act,  partly  from  want  of  jurisdiction,  partly  from 
want  of  executive  power.     Its  jurisdiction  did  not  cover  by  any  means  the  whole 
ground.     The   provisions  about  terminals,  arbitration,  working  agreements,  &c., 
amounted  to  very  little.    Its  real  power  was  under  the  act  of  1854.     It  could  under 
this  act  require  companies  to  furnish  "proper  facilities,"  and  it  could  prevent  their 
giving  "  preferences."     But  it  could  not  compel  a  company  to  comply  with  special 
acts  or  special  provisions  of  its  charter.     This  is  a  serious  difficulty,  because  the  ques- 
tion of  proper  facilities  was  closely  connected  with  charter  requirements,  and  the 
railroad  could  almost  anywhere  raise  the  point  of  want  of  jurisdiction. 

.  Nor  could  it  enforce  its  decrees.  Passive  resistance  of  the  railroads  and  jealousy 
on  the  part  of  the  old  established  courts  combined  to  produce  this  effect.  For  in- 
stance, under  the  act  of  1854,  if  the  railways  refused  to  comply  with  the  decisions  of 
the  court  of  common  pleas,  they  were  liable  to  a  fine  of  $1,000  for  every  day's  delay. 
The  London,  Chatham  and  Dover  Railway  refused  to  comply  with  one  of  the  com- 
mission's decisions,  and  claimed  that  they  were  not  liable  to  any  such  fine,  although 
all  the  powers  of  the  court  of  common  pleas,  under  the  act  of  1854,  had  been  trans- 
ferred to  the  railway  commission  by  the  act  of  1873.  The  court  of  exchequer  ac- 
tually sustained  the  railroad ;  and  it  was  not  until  1878  that  by  a  decision  of  the 
Queen's  bench  the  railway  commission  really  had  the  power  to  do  anything  if  a  com- 
pany chose  to  disregard  its  ordeis. 

The  injunctions  of  the  commission,  at  best,  only  affect  the  future  ;  for  any  remedy 
for  the  past  there  must  be  a  new  complaint  and  trial  before  a  regular  court.  And  so 
it  often  happens  that  a  railroad,  after  exhausting  all  its  means  of  resistance,  obeys 
the  decision  of  the  commission  in  reference  to  one  particular  station,  without  taking 
any  notice  of  it  at  other  stations  where  the  same  principle  is  involved.  Thus,  in  the 
case  of  the  manure  traffic  of  Aberdeen,  after  long  litigation,  the  rate  was  decided  to 
be  illegal.  The  railroad  then  reduced  its  Aberdeen  rates,  but  continued  its  old  sched- 
ule of  charges  at  other  points  on  its  route  where  there  were  not  organized  interests 
strong  enough  to  make  a  fight.  . 

On  the  face  of  the  act  of  1873  the  decisions  of  the  commission,  as  to  what  were 
questions  of  fact  or  questions  of  law,  appeared  to  be  final.  But  by  writ  of  mandamus 
from  a  court  of  appeal  the  decision  on  this  point  could  be  at  once  taken  out  of  the 
hands  of  the  commission  by  compelling  them  "  to  state  a  case,"  which  could  then  be 
made  the  subject  of  action  in  the  higher  court.  So  this  important  power  was  made 
of  no  eft'ect. 

(2)  Complaints  before  the  commission  are  not  quite  so  slow  or  costly  as  they  were 
before  the  courts,  but  they  are  bad  enough  to  prevent  most  men  from  undertaking 
them.     Sir  Frederick  Peel  himself  admits  that  the  expense  frightens  people  away 
from  making  complaints.     But  this  is  by  no  means  the  worst.     The  testimony  before 
the  Parliamentary  committee  of  1881-'82  is  full  of  matter  to  startle  those  who  argue 
that  because  there  are  few  complaints  before  the  commission  there  are  few  men  that 
have  grievances.     Men  have  good  reason  to  think  twice  before  they  enter  a  com- 
plaint. 

In  the  Aberdeen  manure  case,  already  referred  to,  the  Aberdeen  men,  successful  at 
every  point,  lost  more  money  than  they  gained.  Every  important  case  is  so  persist- 
ently appealed  that  the  original  promptness  or  cheapness  of  railway  commission 
practice  counts  for  nothing.  But  the  indirect  results  are  yet  worse.  A  complainant 
is  a  marked  man.  and  the  commission  cannot  protect  him  against  the  vengeance  of 


62  INTERSTATE    COMMERCE. 

the  railroads.  A  (own  fares  110  better.  It  complains  of  high  terminal  charges',  and 
the  company  retorts  by  raising  the  local  tariff  for  that  place  100  per  cent.  A  coal 
mine  complains  of  freight  rates,  and  the  company  refuses  to  carry  for  it  on  any  terms  ; 
it  has  ceased,  it  says,  to  be  a  common  carrier  for  coal.  Even  the  war  department  is 
afraid.  It  has  grievances,  but  it  dares  not  make  them  public  for  fear  of  reprisals- 
"It  is  quite  clear,"  Bays  the  secretary  of  the  board  of  trade,  "that  it  is  a  very  for- 
midable thing  to  fight  a  railway  company." 

It  is  not  easy  to  see  what  can  be  done  in  the  face  of  these  difficulties,  so  different 
from  anything  which  we  see  in  most  American  States.  Our  commissioners,  with 
fewer  powers,  have  infinitely  more  power.  The  reason  is,  that  in  America  to  defy 
such  an  authority  involves  untold  dangers,  public  sentiment  being  irritable  and  un- 
restrained, whereas  in  England  it  involves  no  danger  at  all,  public  sentiment  being 
long-suffering  and  conservative. 

The  lawyers  say,  strengthen  the  legal  element  in  the  commission.  Some  of  the 
railroad  men  say  so  too,  because  they  think  that  a  commission  formed  on  the  model  of 
the  old  courts  would  interfere  no  more  than  the  old  courts.  On  the  other  hand  many 
men  desire  the  appointment  of  a  public  prosecutor  to  relieve  individuals  of  the  danger 
and  odium  of  bringing  complaints,  or  that  chambers  of  commerce  may  be  allowed  to 
undertake  such  prosecutions.  Others  go  still  further  and  urge  that  the  powers  of  the 
commission  be  increased,  and  that  they  be  allowed  to  determine  on  general  grounds 
what  constitutes  a  reasonable  rate.  The  commission  itself  would  be  glad  to  do  that, 
but  such  a  thing,  however  cautiously  carried  out,  would  involve  the  granger  principle 
of  fixing  rates.  It  seems  unlikely  that  Parliament  will  make  any  of  these  proposed 
changes,  except  to  give  chambers  of  commerce  the  right  to  prefer  charges. 

We  have  dwelt  on  the  dark  side  of  the  picture,  because  there  is  a  general  impres- 
sion in  this  country  that  the  English  railway  commission  is  a  complete  success.  It 
must  not  be  inferred  that  it  is  a  complete  failure.  It  has  in  the  first  nine  years  of  its 
existence  passed  judgment  on  one  hundred  and  ten  cases.  Only  seventeen  of  these 
have  been  appealed,  and  in  eleven  of  them  the  commissioners  have  been  sustained. 
The  decisions  have,  as  a  rule,  been  marked  by  good  sense  and  impartiality.  The  di- 
rect good  to  the  complainants  may  have  been  small,  but  the  indirect  good  to  the 
public  was,  doubtless,  great.  The  commission  has  made  serious  and  generally  suc- 
cessful efforts  to  enforce  a  law  in  cases  where  it  would  otherwise  have  been  a  dead 
letter.  These  particular  cases  may  have  given  more  trouble  than  they  were  worth. 
But  the  very  existence  of  such  a  power  constitutes  a  check  upon  abitrary  action  in 
general.  We  cannot  assume,  as  many  do,  that  the  few  complaints  preferred  before 
the  commission  represent  anything  like  the  amount  of  well-founded  grievances.  But 
we  can  assume  that  the  chance  for  such  complaints  to  be  made  and  heeded  makes  the 
railroad  managers  more  cautions  in  giving  occasion  for  them.  Although  no  one  is 
fully  satisfied  with  what  the  commission  has  done,  the  great  majoiity  of  shippers  are 
obviously  of  the  opinion  that  it  has  prevented  much  evil  which  would  otherwise 
have  gone  unchecked. 

In  concluding  his  sketch  of  English  railroad  legislation,  Mr.  Hadley 
shows  that  the  system  of  special  rates  to  develop  business  has  growu 
up  in  the  same  way  as  in  America;  that  the  chief  source  of  pnblic  com 
plaint  is  not  extortionate  rates,  but  differential  rates ;  that  the  low 
through  rates  are  occasioned  by  the  competition  of  the  water  routes, 
which  has  existed  at  three-fifths  of  the  stations  in  the  United  Kingdom ; 
that  the  railroads  have  been  obtaining  control  of  the  canals,  and  even 
of  the  open  water  routes  in  some  cases,  by  securing  possession  of  the 
lauding  places  and  harbor  facilities,  but  are  unable  to  control  the  watc'i 
routes  between  London  and  foreign  countries;  that  while  the  courts 
have  succeeded  in  almost  entirely  stopping  discriminations  between  in 
dividuals,  personal  favoritism,  and  the  payment  of  rebates,  the  discrim- 
inations against -localities  and  certain  lines  of  business  have  become 


INTERSTATE    COMMERCE.  63 

more  conspicuous;  and  he  sums  up  the  present  state  of  thiugs,  as 
follows : 

(1)  The  roads  may  make  what  special  rates  they  please ;  but  if  they  make  a  rate 
for  one  man  they  must  extend  the  same  privilege  to  all  others  in  like  circumstances. 
If  they  have  been  secretly  paying  rebates  to  one  shipper,  they  may  be  compelled  to 
refund  to  any  other  shipper  similarly  placed  the  same  rebates  on  all  his  shipments 
since  the  special  contract  with  the  one  shipper  began. 

(2)  It  is  held  by  the  railway  commissioners  that  two  shippers  are  similarly  placed 
aud  must  be  similarly  treated  when  the  cost  to  the  railroad  of 'handling  the  goods  for 
one  is  the  same  as  for  the  other ;  and,  conversely,  unless  some  special  reason  can  be 
shown,  the  railroad  has  no  right  to  put  a  less  favorably  situated  shipper  on  an  equality 
with  a  more  favorably  situated  one. 

(3)  But  the  last  Parliamentary  committee  has  refused  to  indorse  these  principles, 
and  has  said  that  a  preference  is  not  unjust  so  long  as  it  is  the  natural  result  of  fair 
competition. 


EATLKOAD  LEGISLATION  IN  THE  UNITED  STATES— SUM- 
MARY OF  THE  PROVISIONS  OF  THE  STATE  STATUTES— 
THE  WORK  OF  THE  STATE  COMMISSIONS. 

Railroad  regulation  in  the  United  States  has  thus  far  been  confined 
within  State  limits.  With  the  exception  of  the  two  measures  hereto- 
fore mentioned,  not  of  a  general  regulative  character,  Congress  has  not 
undertaken  to  regulate  the  railroads  engaged  in  interstate  commerce. 
In  many  of  the  States,  however,  earnest  efforts  have  been  made  to  pre- 
vent and  correct  the  abuses  of  railroad  management  by  varying  meth- 
ods of  regulation  aud  with  different  degrees  of  success.  The  history  of 
these  efforts  has  never  been  written,  and  little  has  been  known  of  them 
as  a  whole.  Information  in  regard  to  them  is  not  easily  accessible,  aud 
even  those  best  informed  on  the  subject  have  been  compelled  to  base 
their  conclusions  upon  meager  information  or  upon  their  knowledge  of 
affairs  in  but  a  few  States. 

The  lack  of  accurate  information  as  to  the  methods  of  regulation 
which  have  been  adopted  in  the  several  States,  and  as  to  the  exact  pro- 
visions of  their  enactments  on  the  subject,  and  the  difficulty  of  obtain- 
ing access  to  the  multitude  of  session  laws,  reports,  and  documents  in 
which  such  information  lies  buried,  have  prompted  the  committee,  as  a 
fitting  preliminary  to  action  in  the  same  direction  by  Congress,  as  well 
as  for  the  information  of  the  public,  to  make  as  thorough  an  examina- 
tion as  time  permitted  of  the  railroad  legislation  of  each  State  and  Ter- 
ritory in  the  Union,  and  to  present  in  as  compact  form  as  possible  a 
summary  of  their  legislative  enactments  on  the  subject  of  railroad  reg- 
ulation, together  with  such  information  as  was  attainable  in  regard  to 
the  methods  of  regulation  adopted  and  the  results  accomplished  in  those 
States  in  which  action  has  been  taken. 

The  information  obtained  by  an  examination  of  the  session  laws  of 
each  State  and  Territory,  and  of  the  reports  and  publications  of  the  vari- 
ous State  railroad  commissions,  is  supplemented  by  the  testimony  of  the 
railroad  commissioners  of  New  York,  Massachusetts,  Illinois,  Missouri, 
Iowa,  Nebraska,  Wisconsin,  Minnesota,  Tennessee,  and  Georgia,  who 
personally  appeared  before  the  committee,  and  by  the  written  state- 
ments submitted  by  the  railroad  commissioners  of  Kansas,  Michigan, 
Kentucky,  Maine,  Connecticut,  Ohio,  South  Carolina,  and  Dakota,  ac- 
companying this  report. 


64  INTERSTATE    COMMERCE. 

THE  STATE   RAILROAD   COMMISSIONS. 

The  State  railroad  commissions,  which  are  to-day  a -recognized  factor 
in  railway  administration,  have  come  into  existence  and  prominence 
within  the  last  ten  or  fifteen  years,  although  there  were  so-called  com- 
missions at  an  earlier  period.  New  York  had  a  short-lived  one  in  1855, 
and  after  the  civil  war  several  were  created  for  a  temporary  purpose, 
distinct  from  regulation,  such  as  that  in  Arkansas,  which  passed  upon 
applications  for  State  aid  to  railroads,  and  that  in  Tennessee,  in  1870, 
which  was  authorized  to  sell  or  lease  railroads  in  default  to  the  State  for 
loans.  There  are  marked  differences  in  the  plan  upon  which  the  exist- 
ing State  commissions  are  organized.  Of  the  older  ones,  those  of  the 
New  England  States,  with  the  exception  of  Massachusetts  and  New 
Hampshire,  form  a  distinct  class  by  themselves,  their  duties  being 
mainly  limited  to  the  inspection  of  the  railway  equipment  and  service. 
Of  an  entirely  different  type  were  the  commissions  of  the  Western 
States,  which  owed  their  origin  to  the  widespread  u  granger"  movement. 
Whatever  may  be  said  of  the  character  of  the  legislation  inspired  by 
that  agitation,  it  certainly  served  a  timely  and  useful  purpose  in  its 
day,  and  substantial  and  beneficial  results  must  be  accredited  to  that 
popular  uprising  against  therailroa'd  corporations.  Matters  had  reached 
such  a  pass  that  nothing  short  of  the  sturdy,  forceful  methods  adopted 
in  Illinois  and  in  neighboring  States  could  have  allayed  the  gathering 
storm  of  public  indignation  which  the  then  existing  methods  of  manage- 
ment had  aroused.  But  when,  in  the  notable  "granger  cases,"  the 
United  States  Supreme  Court  upheld  those  methods  and  left  the  rail- 
roads at  the  mercy  of  the  State  legislatures,  the  corporations  assumed 
a  radically  different  attitude  towards  thecommunity  and  towards  the  law- 
making  power.  They  have  since  been  more  ready  to  recognize  their 
public  obligations,  greater  respect  for  public  opinion  is  manifested,  and 
in  consequence  the  recommendations  of  the  State  commissions,  which 
were  at  first  contemptuously  ignored,  have  since,  as  a  rule,  been  com- 
plied with.  This  radical  change  of  policy,  not  adopted  voluntarily,  but 
prompted  solely  by  motives  of  self-interest,  has  been  taken  advantage 
of  by  the  State  commissions  with  acknowledged  favorable  results,  chief 
among  which  have  been  the  cultivation  of  a  better  understanding  and 
state  of  feeling  between  the  railroads  and  the  people*,  and  a  sufficient 
mitigation  of  the  local  abuses  most  prevalent  to  sensibly  diminish  the 
volume  of  complaint. 

Attention  has  already  been  called  to  the  difficulties  of  effective  State 

/regulation  arising  from  the  division  of  powers  between  the  State  and 

(  National  Governments ;  but,  notwithstanding  these  difficulties,  the  good 

\  results  accomplished  under  the  State  commission  system,  the  growing 

)  confidence  of  the  people  in  that  system  as  a  means  by  which  corporate 

''  abuses  can  best  be  restrained  and  regulated,  and  the  more  general  rec- 

\  oguition  of  the  important  principle  that  the  business  of  transportation 

/  requires  special  treatment  for  the  proper  adjustment  of  its  relations  to 

/  the  citizen,  are  indicated  in  the  fact  that  State  after  State  has  adopted 

the  system,  until  commissions  are  now  in  operation  in  twenty -four  States 

and  one  Territory.     The  following  statement  shows  the  States  having 

commissions  and  the  date  in  v?hich  commissions  were  first  established 

in  each  State,  arranged  in  the  order  of  their  establishment : 


INTERSTATE    COMMERCE. 


65 


SUite. 

Date. 

State. 

Hutu. 

State. 

Date. 

1841 

"Wisconsin  

1881 

1868 

Minnesota  ................ 

1S-74 

!  .-:,'. 

Missouri  

1876 

1W3 

1878  1 

1884 

Ohio                         

1867 

Virginia  

is7d 

1X8." 

Iowa  

1X85 

Illinois                    

1871 

Soutli  Cavolinii  

1K78 

Itosa 

Ixiinilo  IsliU.tl 

1872 

Georgia               ....  ..... 

1879 

1&73 

Kentucky      .  

Aii  examination  of  the  statements  hereinafter  submitted  will  show 
that  of  the  thirty-eight  States  and  eight  Territories  (not  including 
Alaska),  making  forty-six  in  all,  in  Arkansas,  Delaware,  Florida,  Indi- 
ana, Louisiana,  Maryland,  Pennsylvania,  New  Jersey,  Tennessee,  and 
"West  Virginia  (ten  States),  and  in  Arizona,  Idaho,  New  Mexico,  Wash- 
ington, Wyoming,  and  Utah  (six  Territories),  sixteen  in  all,  there  is 
either  no  regulation  in  force  or  practically  very  little.  Leaving  these 
fifteen  out  of  account,  it  appears  that  of  the  thirty  States  and  Territo- 
ries that  have  taken  action  twenty-five  have  adopted  the  commission 
system,  while  the  remaining  rive,  Nevada,  North  Carolina,  Oregon, 
Texas,  and  Montana,  depend  upon  legislative  restrictions  without  pro- 
viding any  special  means  for  the  enforcement  of  their  enactments. 

Following  is  a  list  of  the  States  having  railroad  commissions,  show- 
ing when  a  commission  was  established  in  each  State  (not  necessarily 
the  existing  one),  the  names  of  the  present  commissioners  and  their 
secretaries,  the  location  of  the  office  of  the  commission,  and  the  sala- 
ries paid. 

THE   STATE  RAILROAD   COMMISSIONERS. 


State. 

Established. 

Name  and  position. 

Location  of  oflice. 

Salary. 

1^81 

$3  500 

do     

3  000 

....do  

3  000 

do 

1  500 

California 

1876 

4  000 

W.  P.  Humphreys,  commissioner  ....... 

...do  .' 

do 

4,000 
4  000 

do   

2  400 

Colorado  ........ 

1885 

W.  B.  Felker,  commissioner  

IVnviT  ...... 

3,600 

do 

1  800 

1853 

Hartford 

3  000 

do 

3  000 

do   

3  000 

George  T.  Title  v  secretary            ........... 

...  do     

1  KOO 

Dakota 

1885 

Fargo  ......... 

2  000 

do  ... 

2,  000 

AV.  H.  McVav,  commissioner  

....do  

2  000 

...do 

1  500 

Georgia  

1879 

Campbell  Wallace  chairman  

Atlanta  

2,  500 

Leander  M.  Trammel!,  commissioner  

...do  
...  do  

2,  500 
2  500 

do 

1  200 

1871 

John  I.  Rinaker,  chairma  11  ............ 

Springfield  ..... 

3,500 

do 

3  500 

Williiun  T.  Johnson  commissioner  ......... 

...do 

3  500 

do 

1  500 

1878 

3  000 

James  W.  McDill   commissioner  .......  

do 

3  000 

do     

3  000 

<lo 

1  500 

1883 

i 

3  000 

3  000 

-  ^iouer  

do    

3,000 

...do... 

1.500 

S.  Rep.  40- 


66 


INTERSTATE    COMMERCE. 
The  State  railroad  commissioners — Continued. 


State. 

Established. 

Name  and  position. 

Location  of  ntlict*. 

Salary. 

1880 

Frankfort  

$2,  000 

..do    

2,000 

du         

2  000 

do           ...   . 

300 

1858 

$5  per  diem. 

do    

$5  per  diem. 

Massachusetts.  .  . 

1869 

Thomas  Russell,  chairman     

Boston  
do 

4,000 
3  500 

Everett  A.  Stevens,  commissioner  

...do  

3,500 

"Willinm  A   Crafts  clerk                       

do    

2  000 

Michigan.  ....... 

1873 

William  McPherson,  jr..  commissioner...-. 

Lansing  

2,500 

do              ....  

1,600 

Minnesota  ...... 

1874 

Saint  Paul  

3,  000 

...  do     

•       3,  000 

do  

3,000 

E.  S.  Warner,  secretary             ..   --   .  

...do    

1,500 

1884 

'.'  ."n:0 

W.  U.  Augustus,  commissioner.........  

do  

2,500 

.do 

2,500 

do 

1,500 

1870 

•JpftVrson  City 

3,000 

do. 

3,000 

.I  

3,000 

H.  H.  (Jre^g,  secietary    ..                 

do  

1,500 

1885 

do 

J  

do  . 

Charles  i  1  .  Gere,  secretary  

do.  

2,000 

Charles  Buschow.  secretary  

...  do  

2,000 

do          

2,000 

New  Hampshire  . 

1844 

2,500 

E.  B.  S.  San  born  clerk                ............. 

do  

2,200 

do     

2,000 

New  York  

1882 

John  I).  Kcrnan  chairman         .............. 

Albany  

8,000 

do    

8,000 

.  do    

8,000 

William  C.  Hndson,  secretary  .............. 

do  

3,000 

Ohio  

1867 

3  000 

Rhode  Island  ... 

1872 

500 

South  Carolina.  .  . 

1878 

M.  L.  Bonham,  chairman  ................ 

Columbia  

2,100 

do         ... 

2,  100 

IX  P.  Duncan,  commissioner  

..do    

2,  100 

M.  T.  I'artlrtt.  secretary  

....  do    

1,  200 

Vermont  ........ 

1855 

Woodstock    .. 

500 

Virginia  
Wisconsin  

1877 
1874 

Ilorar«  G.  Moffett,  commission.  -r  
Nils  P.  Hanson,  commissioner       
James  H.  Foster,  secretary  and  depnty  

Kirlmiond  
Madison  
...do  

2,  000 
3,000 
1,500 

MASSACHUSETTS. 

The  Massachusetts  commission  furnishes  the  most  conspicuous  in- 
stance of  the  purely  advisory  commission,  depending  upon  investiga- 
tion, the  justice  of  its  conclusions,  and  the  force  of  public  opinion  for 
the  enforcement  of  its  recommendations;  and  by  reason  of  its  success- 
ful working  under  a  novel  plan  and  of  the  ability  of  its  membership  it 
has  always  made  its  influence  widely  felt.  Since  its  establishment  in 
1869  its  career  has  been  closely  watched,  and  its  success  is  now  undis- 
puted. That  it  has  not  been  due  solely  to  fortuitous  circumstances,  or 
to  its  application  to  a  limited  local  field,  is  indicated  by  the  fact  that 
the  principle  upon  which  it  is  organized  has  been  successfully  applied 
in  other  States  and  has  been  followed  with  satisfactory  results  in  the 
State  of  New  York,  with  its  concentration  of  great  and  diverse  railroad 
and  commercial  interests. 

The  statement  of  Judge  Russell,  the  chairman  of  the  board,  so  fully 
explains  the  practical  working  of  the  commission  as  to  leave  little  to  be 


INTERSTATE    COMMERCE.  67 

added  here.  (See  testimony,  p.  300.)  The  main  features  of  the  Massa- 
chnsetts  legislation,  as  given  by  him,  may  be  briefly  stated  as  follows: 

10 very  railroad  charter  granted,  with  the  possible  exception  of  the 
iJoston  and  Lowell  corporation,  which  has  never  set  up  any  privilege 
under  its  charter,  is  subject  to  the  reserved  right  of  the  State  to  at 
pleasure  alter,  amend,  or  repeal.  This  gives  the  State  almost  absolute 
power  over  every  charter.  It  is  also  expressly  enacted  that  all  fares, 
tolls,  and  charges  shall  at  all  times  be  subject  to  revision  or  alteration 
by  the  legislature,  or  by  officers  appointed  thereby.  As  Judge  Eussell 
sa\  s.  this  reserved  power  of  the  legislature,  always  existing,  is  none  the 
less  valuable  because  it  does  not  have  to  be  exercised  more  than  once 
in  ten  years.  There  are  three  statutes  upon  which  .the  commission  de- 
pends. An  early  statute  provided  that  railroads  shall  charge  only 
reasonable  rates,  giving  a  civil  action  for  violation  and  a  criminal  process 
fin  a  penalty.  This  also  required  equal  rates  to  be  given.  Equal  was 
held  by  the  Supreme  Court  to  mean  equitable  rates,  and  another  statute 
was  enacted  which  forbids  any  undue. or  unreasonable  preference  or 
advantage,  or  "  any  undue  or  unreasonable  prejudice  or  disadvantage" 
against  any  party.  \Vhat  is  just  and  what  is  unjust  discrimination, 
between  which  a  dillcience  is  recognized,  is  left  to  the  determination 
ot  the  commission  and  the  courts. 

The  third  statute,  known  as  the  short  haul  law,  has  been  the  subject 
of  so  much  discussion  that  it  is  here  given  in  full,  as  printed  by  the 
commissioners  in  their  report  of  January,  1885,  with  their  comments 
upon  the  law,  as  follows: 

';  N'o  railroad  corporation  shall  charge  or  receive  for  the  transportation  of  freight  to 
any  station  on  its  road  a  greater  sum  than  is  at  the  lime  charged  or  received  for  the 
transportation  of  the  like  class  and  quantity  of  freight  from  the  fame  original  point  of 
dipa:  line  to  a  station  at  a  greater  distance  on  its  road  in  the  saint  direction.  Two  or 
mure  railroad  corporations  whose  roads  connect  shall  not  charge  or  receive  for  the 
transportation  of  freight  to  any  station  on  the  road  of  either  of  them  a  greater  stun 
than  i,-  at  the  time  charged  or  received  for  the  transportation  of  the  like  class  and 
quantity  of  freight  from  l!i>  xdmc  original  point  of  departure  to  a  station  at  a  greater 
distance  on  the  road  of  cither  of  them  i/i  the  name  (lirir'ion.  In  the  construction  of 
this  section  the  sum  charged  or  received  for  the  transportation  of  freight  shall  in- 
clude all  terminal  charges  ;  and  the  road  of  a  corporation  shall  include  all  the  road 
in  use  by  it,  whether  owned  or  operated  under  a  contract  or  lease." 

We  have  italicized  certain  words,  because  in  criticising  the  law  it  is  customary  to 
speak  of  it  as  if  they  were  not   included  in  the  act.     In   fact  these  words  constitute  > 
the  essential  difference  between  our  law  and  the  wild  and  unjust  legislation  which  has/ 
sometimes  been  proposed.     Of  such  propositions  the  board  has  said  in  the  decision' 
referred  to: 

"The  words  in  italics  area  substantive  and  essential  pa'rt  of  the  law,  without, 
which  it  could  not  have  been  passed.  We  have  a  right  to  say  this,  because  such  » 
law  was  proposed  to  the  legislature,  and  was  rejected  in  1671,  when  the  'short  haul 
law'  was  first  enacted.  This  proposed  bill  read  as  follows: 

"  'No  railroad  corporation  of  this  Commonwealth  shall  charge  or  collect  for  the 
transportation  of  goods  or  merchandise  for  any  shorter  distance,  any  larger  amount 
as  lull  or  freight  than  is  charged  or  collected  for  the  carriage  of  similar  quantities  of 
the  same  class  of  goods  over  a  longer  distance  upon  the  same  road.' 

"  But  the  general  court  not  only  have  not  enacted  such  a  bill,  but  have  refused  so 
to  do.  and  for  good  reasons.  It  is  interesting  to  notice  that  when  the  'short  haul 
law  '  ut'  this  State  is  censured,  as  it  recently  has  been  by  interested  parties,  it  is  always 
misrepresented  to  be  just  what  the  petitioners  supposed  it  to  be."  (I'itlsjield  v.  Boston 
and  .lliany  R.  A*.  Company,  Appendix  F.) 


68  INTERSTATE    COMMERCE. 

The  inquiry  most  frequently  addressed  to  the  board  upon  this  mutter  has  been  a 
question  whether  this  law  is  enforced  in  Massachusetts,  or  whether  it  is,  as  has  been 
alleged,  "  a  dead  letter."  To  this  the  answer  has  been  made,  and  it  is  now  made  once 
i  more,  that  no  law  in  this  State  is  more  thoroughly  enforced  than  this.  Indeed  it 
would  be  more  correct  to  say  that,  instead  of  being  enforced  at  all,  it  is  universally 
acquiesced  in  and  obeyed.  It  is  true  that  in  1882  it  was  shown  that  a  railroad  com- 
pany in  this  State  was  acting  in  violation  of  this  law.  But  upon  receiving  the  opin- 
ion of  this  board  that  it  was  so  offending,  the  corporation  desisted  from  the  prac- 
tice, and  lowered  its  rates  to  conform  to  the  statute  requirements.  And  this  was 
done,  as  the  managers  of  that  corporation  inform  their  stockholders,  at  the  annual 
loss  of  $37,000  illegally  extorted  heretofore  from  their  customers.  Since  that  time 
neither  this  nor  any  other  railroad  company  has,  to  the  knowledge  or  belief  of  the 
board,  violated  this 'pro vision  of  the  statutes.  And  now  the  fact  that,  because  of 
their  obedience  to  law,  they  are  not  indicted  is  used  in  other  States  lo  prove  that  our 
act  is  "  a  dead  letter.* 

In  an  extended  investigation  of  freight  rates  made  a  year  since  with  reference  to 
other  questions,  and  in  some  recent  inquiries  made  with  special  reference  to  this 
question,  the  board  has  observed  the  scrupulous  care  with  which,  in  spite  of  tempta- 
tions, any  infraction  of  this  law  has  been  avoided.  In  exceptional  cases,  and  to  a 
small  extent,  it  may  work  harshly,  but  its  general  working  has  been  most  beneficial. 
It  has  remedied  a  great  evil  and  a  great  injustice  ;  it  has  helped  to  save  small  indus- 
tries and  small  places  from  being  crushed  out  of  existence;  it  has  checked  the  ten- 
dency to  consolidation,  which  would  build  up  one  place  or  a  few  places  ai  the  cost  of 
local  enterprise,  thus  creating  traffic  for  the  railroads  by  giving  occupation  tu  their 
customers.  And  it  is  believed  that  any  attempt  to  repeal  this  safeguard  of  fair  deal- 
ing would  receive  almost  universal  condemnation  from  the  business  men  of  Massa- 
chusetts. 

The  short-haul  law,  as  the  text  shows,  applies  to  connecting  roads  and 

/  to  freight  of  the  same  kind.     To  come  under  the  law  goods  must  be  of 

the  same  kind,  of  the  same  quantity,  must  start  from  the  same  point,  ;md 

must  be  going  iu  the  same  direction  over  the  same  road.     It  does  not 

contemplate  that  freight  rates  should  be  proportionate  to  mileage. 

In  addition  to  these  general  statutes,  the  physical  condition  of  the 
roads  is  intrusted  to  the  commission,  the  ordering1  of  precautions,  the 
regulation  of  crossings,  the  examination  into  the  causes  and  prevention 
of  accidents,  and  the  terms  upon  which  connecting  roads  shall  take 
traffic  from  each  other.  Upon  these  matters  the  commission  has  positive 
power  and  gives  decisions  which  a  court  would  enforce. 

Under  another  statute,  whenever  twenty  citizens  of  a  town  apply  to 
ihe  selectmen  or  the  city  government  and  state  any  grievance  against 
a  road,  they  must  look  into  the  same,  or  petition  the  commission,  or 
give  a  reason  why  they  do  not.  In  either  case  the  question  reaches  the 
board  for  in  vestigation.  The  com  mission  also  investigates  all  complaints 
as  to  the  location  of  stations  or  the  lack  of  such  accommodations.  As 
to  the  advantages  of  the  public  hearings  held  by  the  commission  on  all 
matters  brought  before  it,  Judge  Itussell  says: 

Of  course  the  petitioners  do  not  always  gain  their  case  as  to  accommodations  or  as 
to  rates,  but  they  have  the  satisfaction  of  being  heard.  And  it  often  happens  that 
when  the  circumstances  are  explained  they  find  that  their  grievance  is  imaginary  or 
at  least  that  it  is  less  than  they  had  supposed.  A  public  hearing  on  the  spot  often 
leads  to  a  better  understanding.  On  the  other  hand,  it  has  happened  more  than  once 
that  when  the  complainants  have  told  their  story  the  railroad  managers  have  granted 
their  request  at  once.  Yet  the  time  might  never  have  come  when  the  managers 
would  hear  the  petition  had  not  the  law  appointed  a  tribunal  and  had  not  the  tri-, 
buual  appointed  a  place  and  a  day  for  hearing  it. 


INTERSTATE    COMMERCE.  69 

It  will  thus  be  seen  that  the  most  noticeable  characteristic  of  the 
Massachusetts  system  is  its  simplicity.  Its  distinguishing  feature  is 
flic  very  limited  arbitrary  power  of  the  commissioners.  They  are  given 
every  facility  and  all  the  authority  needed  to  obtain  full  information  as 
to  the  actual  operations  of  the  railroads.  With  the  opportunity  thus 
afforded  of  ascertaining  the  actual  facts  as  to  any  given  matter  of  com- 
plaint, they  are  forced  to  sustain  their  position  in  every  proceeding  by 
making  out  a  case  that  will  stand  the  test  of  public  criticism  and  carry 
conviction  with  it,  whether  the  decision  be  in  favor  of  the  complaining 
citizen  or  of  the  defendant  railroad.  As  Mr.  Adams  said  in  1874,  the 
commission  was  "  simply  a  medium,  a  species  of  lens  by  means  Of 
which  the  otherwise  scattered  and  powerless  rays  of  public  opinion 
could  be  concentrated  to  a  focus  and  brought  to  bear  upon  any  corpo- 
ration." 

The  fact  that  during  the  fifteen  years  of  its  existence  every  decision 
of  the  commission  on  the  many  complicated  questions  as  to  rates  and 
discriminations  that  have  arisen  has  vindicated  and  enforced  itself 
without  resort  to  the  courts  (See  Testimony,  p.  303),  must  be  regarded  as 
satisfactory  evidence  that  the  system  has  proved  effective  where  it  has 
been  most  thoroughly  tested. 

It  has  been  so,  not  because  the  railroad  managers  of  Massachusetts 
are  different  from  those  of  other  States,  not  because  they  prefer  to  run 
their  roads  by  the  advice  of  the  commissioners  rather  than  to  follow 
their  own  notions,  but  simply  because  self-interest  admonishes  them  of 
the  supreme  folly  of  encouraging  or  engaging  in  a  losing  contest  with 
the  forces  of  public  opinion  as  concentrated  and  made  effective  through 
the  commission.  It  is  not  because  the  managers,  directors,  or  stock- 
holders personally  shrink  from  public  criticism,  but  because  back  of  the 
commission  stands  the  legislature  and  back  of  the  legislature  stand  the 
people,  and  they  realize  that  themselves  will  inevitably  be  the  sufferers 
when  they  invite  or  provoke  a  contest  with  those  forces. 

In  the  way  of  practical  results  the  Massachusetts  commission  is  shown 
l>y  its  record  and  by  the  testimony  to  have  exercised  by  its  reports  and 
decisions  an  acknowledged  influence  upon  railroad  managers  in  bring- 
ing about  needed  reforms,  and  to  have  been  successful  in  the  redress  of 
grievances  and  the  correction  of  abuses.  It  has  held  the  railroads  to 
obedience  to  the  laws,  and  has  not  only  secured  the  passage  of  needful 
legislation,  but  prevented  unwise  measures.  Through  its  recommenda- 
tions  voluntary  reductions  in  rates  have  been  made  and  discriminations 
of  different  kinds  done  away  with.  It  has  secured  uniformity  in  the 
accounts  and  reports  of  the  roads.  It  has  fixed  the  responsibility  of 
accidents  and  done  great  service  in  requiring  the  adoption  of  improved 
appliances  for  safety.  Other  specific  instances  of  the  results  accom- 
plished are  mentioned  by  Judge  Eussell,  and  in  conclusion  it  may  be 
said  that  the  committee  made  especial  effort,  by  inquiries  among  all 
classes  of  the  community,  to  ascertain  the  popular  judgment  in  Massa- 
chusetts as  to  the  working  of  the  commission,  and  that  not  a  whisper  of 
complaint  against  its  methods  was  heard,  nor  was  there  found  any  indi- 
cation of  dissatisfaction  in  that  State  with  the  operation  or  results  of 
the  existing  system. 


70 


INTERSTATE    COMMERCE. 


The  following  statements  contained  in  the  last  report  of  the  commis- 
sion (January,  1885),  are  of  more  than  local  interest : 

COST  OF   RUNNING  TRAINS. 

The  average  cost  of  running  trains  1  mile  during  this  year  on  all  the  roads  reported 
has  been  $0.895.  The  cost  of  running  each  train  mile  lor  the  past  eight  years  was  as 

follows : 

Cost  per  total  train  mile. 

1876-77 $.980 

1877-78 884 

1878-79 845 

1879-'80 902 

1880-'81 810 

1881-'82 863 

1882-'83...1 949 

1883-'84 895 

FARES   AND  FREIGHTS. 

The  four  following  tables  show  the  average  fares  on  all  roads,  the  average  fares 
and  freights  for  eight  years  on  the  leading  roads,  and  the  change  in  average  rate  of 
freight  ou  seven  roads  since  18(55 : 

Average  fare  on  all  roads  in  the  State. 


Year. 

Amount 

Year. 

Amount. 

1876-77             

$0.  0240 

1880-'81  .. 

$0.  02°0 

1877-'78               

0.  0240 

1881-'82  

0.  0200 

1878-79                  

0.  0212 

1882-'83  

0.  0201 

1879-'fcO                 

0.0224 

1883-'84  

0.  0192 

Average  fares  for  six  years. 


Fares. 


1878-79. 

1879-'80. 

1880-'81. 

1881-'82. 

1882-'83. 

1883-'84. 

Boston  and  Albany 

Cents. 
2.14 

Cents. 
2.08 

Cents 
1.97 

Cents. 
1.97 

Cents. 
2.08 

Cents. 
1.91 

1.93 

2.06 

1.99 

1.95 

1.97 

.  00 

Boston  and  Providence    -.  

1.80 

1.80 

1.  95 

I.  M 

1.88 

.88 

Old  Colony        

2.00 

2.00 

2.  14 

2.00 

2.00 

.87 

Boston  and  Lowell  

2.04 

1.92 

1.88 

1.C7 

1.  94 

-".12 

Fitch  burg         .        

1.90 

1.89 

1.82 

1.71 

1.77 

05 

K:ist  '  •  1  H    

2.05 

1.97 

1.93 

1.88 

1.82 

.72 

2  15 

2.12 

2.25 

2.09 

2.06 

2.01 

Connecticut  River  
New  York.  New  Haven  and  Hartford  .  . 

2.61 
2.26 
2.37 

2.59 
2  02 
2.33 

2.53 
1.80 
2.24 

2.48 
1.81 
2.  12 

2.36 
1.98 
2.14 

1.96 
2.12 

Worcester,  Nashua  and  Rochester  

2.90 

2.78 

2.69 

2.79 

2.74 

2.  74 

INTERSTATE    COMMERCE. 
Average  freights  for  six  years. 


71 


Freight*. 

1879. 

1880. 

188L 

1882. 

1883. 

1884. 

Cents. 
1.  11 
2.49 
2.27 
2.69 
3.35 
1.30 
2.19 
2.89 
3.50 
2.36 
2.97 
2.30 

Cents. 
1.20 
2.33 
2.44 
2.90 
2.95 
1.37 
1.94 
2.86 
3.35 
2.10 
2.85 
2.02 

Cents. 
1.04 
2.43 
2.77 
2.99 
3.13 
1.26 
2.06 
2.20 
2.99 
1.79 
2.80 
2.22 

Cents. 
1.07 
2.35 
2.83 
3.04 
2.60 
1.18 
2.03 
1.77 
3.07 
1.98 
2.78 
2.29 

Cents. 
1.20 
2.24 
2.83 
3.16 
2.98 
1.19 
1.92 
1.38 
3.04 
1.89 
2.96 
2.34 

Cents. 
1.09 
2.34 
2,82 
3.  Ob 
2.33 
1.09 
1.81 
1.41 
3.05 
1.90 
3.09 
2.33 

Boston  and  Maine  

OldColony               -                    

Boston  and  Lowell      

Fitchbnrg     

New  York  New  Haven  and  Hartford  

Providence  and  Worcester    

Average  rates  of  freight,  1865  and  1884. 


Kate  1865. 

Rate  1884. 

Per  cent, 
of  1884  to 
1865. 

Boston  and  Albany  -  

Cents. 
3.90 

Cents. 
1.09 

28 

4  58 

2  34 

51 

4.38 

2  82 

64 

Eastern          

4.40 

1.81 

41 

Connecticut  River  

6.20 

3.05 

49 

Fitclibnrg  

4.10 

1.09 

27 

OldColony  

3.20 

3.00 

M 

ILLINOIS. 

The  Illinois  commission  has  been  the  leading  exponent  of  the  other 
theory  of  regulation  through  a  commission,  aiid  is  next  considered  to 
bring  the  two  systems  into  contrast  and  because  the  Illinois  legislation 
has  been  followed  in  a  number  of  States.  It  was  inaugurated  by  the 
adoption  of  the  constitution  of  1870,  now  in  force,  which  declared  rail- 
ways to  be  public  highways,  and  free  to  all  persons  for  the  transpor- 
tation of  their  persons  and  property  thereon,  under  such  regulations  as 
may  be  prescribed  by  law.  The  general  assembly  is  required  to  pass 
laws  establishing  reasonable  maximum  rates  of  charges  for  the  trans- 
portation of  passengers  and  freight ;  to  correct  abuses  and' prevent  un- 
just discrimination  and  extortion  ;  and  to  enforce  such  laws  by  adequate 
penalties  to  the  extent,  if  necessary  for  that  purpose,  of  forfeiture  of  the 
property  and  franchise  of  the  railways.  The  consolidation  of  railroad 
companies  owning  parallel  or  competing  lines  is  prohibited,  and  sixty 
days'  public  notice  of  all  proposed  consolidations  is  required. 

In  compliance  with  these  requirements,  the  act  of  1871  created  the 
railroad  and  warehouse  commission,  consisting  of  three  commissioners 
appointed  by  the  governor,  and  subject  to  removal  at  his  discretion. 
Their  term  of  office  is  two  years.  No  person  connected  with,  inter- 
ested in,  or  employed  by  any  railroad  company  or  warehouseman  shall  be 
eligible  to  such  appointment.  They  give  bonds  in  the  sum  of  $20,000, 
are  paid  $3,500  per  annum  by  the  State,  and  have  the  right  to  pass 
free  over  all  the  railroaus  of  the  State  in  the  performance  of  their  du- 
ties. Annual  reports  under  the  oath  of  the  proper  officers  are  required 


72  INTERSTATE    COMMEECE. 

from  every  railroad  and  warehouse,  the  act  specifying  in  detail  what 
such  reports  shall  contain, 

The  commissioners  are  required  to  examine  into  the  condition  and 
management  of  the  railroads  and  warehouses,  and  to  prosecute  all  vio- 
lations of  the  laws  relating  to  them  which  come  to  their  knowledge. 
They  are  authorized,  upon  hearing,  to  cancel  the  license  of  any  public 
warehouseman  found  guilty  by  them  of  violating  the  law.  They  are 
given  authority  to  examine  the  property,  books,  and  records  of  all  rail- 
road companies  and  warehousemen,  and  to  examine  their  officers  and 
employes  under  oath.  In  making  investigations  they  can  compel  the 
attendance  of  witnesses  by  the  aid  of  the  circuit  courts,  the  penalty  for 
refusing  to  appear  and  testify  being  a  fine  of  from  $25  to  $500,  or  im- 
prisonment for  thirty  days,  or  both.  The  penalty  for  failing  to  make 
the  reports  required  or  for  obstructing  the  commissioners  in  the  dis- 
charge of  their  duties  is  a  fine  of  $100  to  $5,000,  with  a  like  penalty 
for  every  ten  days  of  willful  refusal.  The  attorney-general  and  the 
state's  attorneys  of  the  respective  counties  are  required  to  prosecute 
all  suits  and  proceedings  directed  by  the  commissioners. 

There  were  other  provisions  forbidding  any  discrimination  whatever, 
under  any  circumstances,  but  these  were  declared  unconstitutional  by 
the  supreme  court  of  the  State,  because  the  act  failed  to  recognize  the 
distinction  between  discrimination  and  unjust  discrimination,  but  pro- 
hibited discriminations  of  any  character,  and  because  it  did  not  allow 
the  companies  to  explain  the  reason  of  the  discrimination.  Accordingly 
the  next  legislature,  in  1873,  passed  the  amendatory  act  now  in  force, 
which  defines  and  prohibits  extortion  and  unjust  discrimination,  makes 
discriminating  charges  prima  facie  evidence  of  unjust  discrimination, 
and  fixes  the  penalties  at  a  fine  of  from  $1,000  to  $5,000  for  the  first 
offense,  $5,000  to  $10,000  for  the  second,  and  $10,000  to  $20,000  for  the 
third  offense,  and  makes  the  company  liable  to  a  fine  of  $25,000  for  each 
subsequent  conviction.  Persons  damaged  by  such  charges  may  also 
recover  triple  damages,  with  costs  of  suit  and  attorney's  fee.  It  is  made 
the  duty  of  the  commissioners  to  make,  for  each  railroad  doing  business 
in  the  State,  a  schedule  of  reasonable  maximum  rates,  which  schedule 
shall  in  all  suits  against  such  railroads  be  deemed  and  taken  by  the 
courts  as  prima  facie  evidence  that  the  rates  therein  fixed  are  reason- 
able. This  changed  the  rule  of  evidence  so  that,  if  the  railroad  charged 
more  than  the  maximum  rate,  and  the  case  was  taken  into  court,  the 
burden  of  proof  was  thrown  upon  the  railroad,  which  was  compelled  to 
prove  such  charge  a  reasonable  one,  instead  of  the  people  being  com- 
pelled to  prove  it  an  unreasonable  one. 

Under  this  act  separate  schedules  for  each  road  were  prepared,  but 
since  1881  the  roads  have  been  divided  into  two  groups,  with  but  two 
schedules,  a  slightly  higher  rate  being  fixed  for  the  less  prosperous  and 
least  favorably  situated  roads.  The  railroads  did  not  accept  the  rates 
prescribed,  and  litigation  ensued  all  over  the  State.  The  contest  was  a 
memorable  one,  and  it  was  not  until  1880,  six  years  later,  that  the  valid- 
ity of  this  legislation  was  finally  determined.  Meantime  a  notable 
victory  was  achieved  and  the  final  outcome  of  the  contest  foreshadowed, 
when  the  United  States  Supreme  Court,  in  1877,  decided  the  Muuu 
case  and  affirmed  that  part  of  the  legislation  regulating  the  ware- 
housing and  inspection  of  grain. 

The  membership  of  the  board  was  changed  in  1877,  and  the  new 
commissioners  were  prompt  to  make  the  most  of  the  changed  attitude 
assumed  by  the  corporations  after  the  warehouse  decision.  While 
awaiting  the  final  determination  of  their  authority  by  the  courts,  they 


INTERSTATE    COMMERCE.  73 

put  in  practice  the  Massachusetts  principle  of  arbitration,  believing 
it  useless  to  indefinitely  multiply  the  number  of  suits  instituted.  Says 
Mr.  Bogue,  for  six  years  a  member  of  the  commission: 

We  constituted  ourselves  (on  our  own  motion,  as  there  is  no  such  power  iu  the  law) 
a  sort  of  board  of  arbitration,  in  which  we  heard  all  complaints.  We  communicated 
with  the  railroads  in  regard  to  them,  and  in  nearly  every  case  all  the  complaints 
were  adjusted  very  quickly  and  readily  by  the  roads.  (Testimony,  p.  734.) 

This  policy  lias  been  since  continued,  and  without  any  modification 
of  the  law  has  become  a  recognized  feature  of  the  Illinois  system,  which 
thus  combines  the  principle  upon  which  the  Massachusetts  commission 
has  operated  with  perhaps  the  most  stringent  railroad  legislation  in 
the  United  States. 

As  to  general  results,  the  Illinois  legislation  must  be  credited  with 
contributing  largely  to  the  memorable  triumph  over  the  corporations 
achieved  in  the  "  Granger"  decisions.  As  to  the  work  of  the  commis- 
sion within  the  State,  it  is  in  evidence  that  the  rates  prescribed  in  1881 
made  an  average  reduction  of  about  30  per  cent,  upon  those  of  1874. 
This  schedule  was  accepted  by  all  the  roads  in  the  State,  and  became 
the  standard  of  the  charging  rates.  This  was  not  wholly  due  to  legis- 
lation, for  there  had  been  a  considerable  voluntary  reduction  of  rates 
>since  1874,  but  the  commission  must  be  credited  with  having  secured  a 
substantial  reduction  in  the  rates  charged  at  non-competing  points. 
At  these  points  the  roads  charge  the  maximum  rates  allowed,  and  it  is 
at  such  points,  which  are  otherwise  without  protection,  that  the  benefits 
of  this  legislation  are  most  apparent.  It  is  also  shown  that  with  a 
largely  increased  mileage  and  voluiiie  of  business  there  has  been  a 
steady  decrease  in  the  receipts  per  mile  of  the  roads  on  their  business 
in  Illinois,  showing  a  constant  reduction  in  rates,  and  that  the  average 
rates  prevailing  in  Illinois  have  been  lower  than  in  the  adjoining 
States. 

It  is  also  in  evidence  that  the  roads  are  complying  with  the  law  and 
the  regulations  of  the  commission,  and  that,  since  1877,  the  commission 
has  brought  about  more  harmonious  relations  between  the  corporations 
and  the  people,  but  it  is  not  claimed  that  the  law,  or  the  system  of  fixing 
rates,  is  in  all  respects  satisfactory.  In  the  report  of  1882,  the  following 
suggestion  was  made : 

The  commission  has  found  some  difficulty  in  doing  complete  justice  in  many  cases 
coming  before  the  board,  owing  to  the  mandatory  and  inflexible  character  of  certain 
provisions  of  the  law,  as,  in  the  case  of  all  statutory  enactments,  instances  will  arise 
where  justice  between  the  parties  can  be  better  accomplished  by  relaxing  the  more 
rigid  rules  of  the  law ;  and  we  are  of  the  opinion  that  this  statute  could  be  better 
administered,  and  justice  better  insured,  if  some  amendments  were  made,  rendering 
certain  of  its  provisions  more  flexible,  and  giving  the  commission  greater  discretion- 
ary powers. 

In  the  report  of  1884,  another  set  of  commissioners  furnish  a  notable 
instance  of  the  disadvantages  that  may  result  from  an  inflexible  law  in 
the  following  statement: 

APPLICATION   OP  J.    F.    TUCKER,    GENERAL  TRAFFIC   MANAGER  OF   THE   ILLINOIS   CEN- 
TRAL RAILROAD,   FOR  SPECIAL   RATE   ON   COAL. 

Tracy  and  Starne,  of  Springfield,  were  desirous  of  supplying  the  Michigan  Central 
Railroad  Company  with  coal  at  Chicago.  This  involved  a  haul  of  200  tons  daily  from 
Springfield  and  300  from  Tracy,  upon  which  they  could  only  pay  a  rate  of  $1  per  ton 


74  INTERSTATE    COMMERCE. 

from  tin-  former  and  55  cents  per  toil  from  the  latter  place.  On  tlir  hasis  of  the  Chi- 
cago selling  ]n  ice  at  that  time,  it  would  have  amounted  to  au  industry  for  the  State 
of  nearly  half  a  million  dollars.  The  gross  revenue  to  the  Illinois  Central  Railroad 
Company  derived  from  it  would  have  been  annually  about  $200.000,  and  the  State 
would  have  received  7  per  cent,  of  that  amount,  or  $14,000  a  year.  The  competition 
in  this  case  was  with  the  Indiana  mines.  It  was  not  commercial  coal,  and  being  lim- 
ited to  the  use  of  the  Michigan  Central  Railroad  Company  alone,  would  not  have 
affected  the  rights  or  interests  of  persons  in  the  general  market  at  all,  as  the  company 
for  which  it  was  intended  would  in  no  event  be  a  purchaser  there.  It  would  have 
developed  the  mines  in  question,  but  not  at  the  expense  of  any  other  town  or  mine  or 
citizen  of  the  State  of  Illinois.  The  commission,  however,  had  not  the  discretion 
under  the  law  to  make  such  a  rate,  and  the  business  went  elsewhere.  Pos-ibly  this 
course  is  right  and  best,  but  many  clear-headed  people  find  it  difficult  to  sec  ihe  wis- 
dom of  it.  It  in  reality  seems  to  give  the  force  of  law  to  a  discrimination  against  im- 
portant interests  of  our  own  State,  and  forbids  the  exercise  of  the  commonest  mot  ives 
of  self-protection  usually  resorted  to  in  such  cases. 

In  conclusion,  the  following  statement  as  to  the  results  of  the  Illinois 
system,  taken  from  the  report  of  the  commission  for  1884,  is  presented : 

Thirteen  years  ago  this  commission  was  established,  and  for  many  years  struggled 
to  obtain  that  recognition  to  which  it  was  entitled  by  law,  and  now.  after  the  high- 
est legal  tribunals  have  affirmed  the  great  powers  conferred  thereon,  all  the  railroads 
doing  business  in  the  State  comply  with  the  requirements  and  decisions  of  the  com- 
mission on  the  various  questions  connected  with  the  great  problems  of  transporta- 
tion. 

The  inclination  now  apparent  in  railroad  management  to  avoid  prosecutions  and  to 
foster  friendly  relations  with  the  public  demonstrates  the  wisdom  and  efficiency  of 
the  present  system  of  State  control  of  corporate  interests. 

For  further  information  as  to  the  history  of  the  commission  reference 
is  made  to  the  statement  of  Mr.  George  M.  Bogue  (Testimony,  p.  732),  and 
as  to  its  present  workings  to  the  statements  of  Commissioner  Kinakev 
(Testimony,  p.  548),  and  of  Messrs.  Edward  C.  Lewis  (Testimony,  p.  f>(M) 
and  William  N.  Brainard  (Testimony,  p.  579),  late  commissioners. 

NEW  YORK. 

The  policy  of  practically  unrestricted  railroad  construction  which  has 
prevailed  among  the  States  was  inaugurated  by  New  York  in  1850  by 
the  adoption  of  its  general  railroad  law.  Since  that  date  the  legisla- 
tion of  that  State  in  relation  to  railroads  has  been  so  voluminous  that 
only  the  principal  features  of  the  act  of  1882,  creating  the  railroad 
commission,  can  be  considered  here.  The  general  powers  of  the  board 
were  thus  stated  by  Commissioner  Kernan : 

Under  the  act  of  this  State  the  power  of  the  board  is  that  of  an  investigating  and 
advisory  body.  We  are  directed  in  all  matters  connected  with  railroad  management 
and  transportation,  and  with  the  condition  and  operation  of  railroads,  to  keep  our- 
selves fully  informed,  and  under  the  act  are  provided  with  abundant  facilities  and 
powers  to  that  end.  We  are  directed  to  report  violations  of  law  by  any  railroad 
corporation  in  the  State  to  the  attorney-general,  and  he  is  to  take  such  action  as  may 
be  necessary  for  the  protection  of  the  public  interests.  We  are  also  required  to  rec 
ominend  that  repairs  be  made  where  necessary;  that  additions  to  rolling-stock 
changes  in  stations  or  station-houses,  or  additional  terminal  and  other  facilities,  shall 
be  afforded  where  needed;  also,  that  any  changes  in  the  rates  of  fare  or  freight  !..• 
made  wherever  we  deem  it  reasonable  and  expedient  in  order  to  promote  the  s.-< -n 
convenience,  and  accommodation  of  the  public.  (Testimony,  p.  4.) 


INTERSTATE    COMMERCE.  75 

If  the  roads  ftiil  to  comply  with  the  recommendations  of  the  board, 
it  is  its  duty  to  report  the  facts  to  the  attorney  general,  who  takes 
action  in  cases  of  the  violation  of  a  statute  or  of  a  charter  obligation, 
or  to  the  legislature  if  special  legislation  is  needed.  The  statute  con- 
tains no  specific  compulsory  provision  making  the  recommendation  of 
the  board  obligatory  upon  the  railroads,  and  it  is  as  yet  an  open  ques- 
tion whether  under  the  statute  such  a  recommendation  imposes  upon 
the  corporations  a  legal  obligation  to  comply  therewith.  The  commis- 
sioners express  themselves  as  satisfied  with  the  powers  conferred  upon 
them,  but  have  twice  asked  for  additional  legislation  to  facilitate 
the  enforcement  of  their  recommendations.  They  suggested  the  amend- 
ment of  the  present  act  as  hereinafter  stated  for  the  following  rea- 
sons : 

The  board  would  suggest  that  the  best  method  to  enforce  its  decisions,  or  to  neview 
them,  if  unjust  or  unreasonable,  would  be  to  amend  the  act  by  providing: 

(1)  That  railroads  shall  be  obliged  to  comply  with  reasonable  and  expedient  recom- 
mendations. 

(2)  That  failure  to  so  comply  with  such  recommendations  shall  subject  them  to  ade- 
quate penalties. 

(3)  That  in  all  actions  for  penalties  hereafter  incurred,  the  recommendations  of  the 
board  and  its  findings  t-hall  be  prima  facie  evidence  of  the  facts  found,  and  of  them* - 
sonablencss  and  tvpediency  of  the  recommendations  made. 

Thus  the  people  could  enforce  recommendations  that  are  right. 

Thus  railroads  could  contest  such  as  might  be  unjust  and  unreasonable,  and  protect 
themselves  from  public  odium  for  their  refusals  to  obey.  • 

Thus  the  findings  and  decisions  of  the  board  would  bo  free  from  that  autocratic  char- 
acter which  they  seem  now  to  possess,  and  yet  could  be  used  in  actions  by  the  people 
for  penalties  to  establish  prima  facie  the  facts  upon  which  the  action  would  be  based, 
and  to  place  properly  upon  railroads  the  onus  of  proving  the  findings  and  recommen- 
dat  ions  of  the  board  to  have  been  wrong.  \Ve  say  properly  placing  this  onus  upon 
railroads,  because  it  seems  ridiculous  that  the  hearings  before  the  board  and  its  labors 
should  go  for  nothing,  and  again  because  all  the  facts  and  data  relating  to  such  mat- 
ters are  usually  within  the  exclusive  knowledge  and  possession  of  railroads. 

The  board  consists  of  three  members  appointed  by  the  governor,  one 
being  chosen  from  each  of  the  two  leadiugparties  and  one  to  represent  the 
Chamber  of  Commerce  of  the  State  of  New  York,  the  New  York  Board 
of  Trade  and  Transportation,  and  the  National  Anti-monopoly  League. 
The  act  provides  for  assessing  the  salaries  and  all  the  expenses  of  the 
commission  upon  the  railroads  of  the  State.  The  board  is  given  con- 
trol over  the  form  of  annual  reports  of  the  railroads,  which  are  re- 
quired to  furnish  all  information  called  for,  and  to  give  every  facility 
for  inspection  of  their  records  and  property.  Managers  are  required  to 
report  all  accidents  involving  loss  of  life  or  injury  to  persons,  and  the 
board  to  investigate  and  report  upon  the  same. 

The  annual  reports  already  published  by  the  commissioners  attest 
the  value  of  their  services  to  the  people  of  the  State.  One  of  their  first 
important  duties  was  to  investigate  the  advisability  of  rate-fixing  legis- 
lation and  report  to  the  State  senate  upon  a  proposed  pro  rata  freight 
act.  In  their  report  the  commissioners  reviewed  the  efforts  made  by 
the  various  States  and  by  foreign  countries  to  regulate  transportation, 
and  reference  is  made  to  the  testimony  of  Commissioner  Kernan,  in 
which  he  summarizes  the  views  of  the  board  upon  fixing  rates,  pool- 
ing, and  the  other  questions  investigated.  (Testimony,  p.  6.)  Refer- 


76  INTERSTATE    COMMERCE. 

ring  to  this  investigation,  and  to  the  other  cases  decided  during  the 
year,  the  report  for  1884  says : 

The  board  has  not  beeu  unanimous  in  its  decisions  in  several  of  these  cases,  although 
it  has  reached  unanimously  the  following  conclusions : 

(1)  There  should  be  entire  publicity  of  railroad  rates,  whether  the  same  be  tariff  or 
special  rates. 

(2)  Railroads  should  not,  as  a  general  rule,  charge  more  between  a  terminal  and  an 
intermediate  point,  for  a  like  class  and  quantity  of  freight,  than  is  charged  between 
such  terminarand  a  more  distant  point,  even  though  at  such  more  distant  point  there  be 
railroad  or  water  competition,  unless  railroads  can  affirmatively  establish  such  circum- 
stances governing  such  competition  as  justify  the  higher  charge  for  the  shorter  dis- 
tance. 

(3)  Any  form  of  contract  or  any  kind  of  discrimination  against  shippers,  which  com- 
pels citizens  to  refrain  from  freely  using  the  canals  of  the  State  in  preference  to  rail- 
roads, is  against  a  sound  public  policy  and  ought  not  to  be  permitted. 

(4)  There  is  no  form,  of  specific  rate-fixing  legislation  which  can  be  at  present  rec- 
ommended.    Such  legislation  is  not  advisable  in  this  State  until  it  is  established  that 
all  proper  modifications  in  rates  and  correction  of  existing  wrongs  cannot  be  obtained 
under  existing  laws,  with  the  amendments  as  are  hereafter  recommended. 

The  commission  has  passed  upon  a  considerable  number  of  complaints, 
and  the  testimony  shows  that  in  most  instances  the  recommendations 
of  the  board  have  been  complied  with  without  recourse  to  the  courts  or 
further  proceedings.  The  significant  fact  that  the  strongest  and  most 
influential  corporations  are  usually  the  most  ready  to  comply  with  the 
requirements  of  the  board,  a  fact  to  which  the  attention  of  the  committee 
has  also  been  called  by  the  commissioners  of  other  States,  was  stated  by 
Commissioner  O'Donnell  as  follows : 

Now,  I  want  to  state  another  fact,  which  is  very  important  from  my  standpoint.  I 
believe  our  commission  act  would  be  like  a  rope  of  sand  were  it  not  for  the  fact  that 
the  principal  railroads  of  the  State  of  New  York  have  cheerfully  obeyed  our  recom- 
mendations. Had  they  treated  us  as  one  or  two  lateral  roads  have,  we  should  not 
probably  have  had  a  single  recommendation  obeyed.  The  first  among  theso  is  the 
New  York  Central,  which  was  formerly  the  worst  opponent  of  a  commission  law  that 
we  ever  had.  I  have  appeared  and  argued  against  Mr.  Depew  time  and  again,  for 
years,  in  favor  of  a  commission  act ;  but  since  the  enactment  of  the  law  the  Now  York 
Central  road  has  been  foremost  in  obeying  our  decisions  promptly  and  pleasantly. 
The  importance  of  this  remark  will  be  seen  when  I  state  that  we  have  had  forty-six 
complaints  against  the  New  York  Central  road. 

The  CHAIRMAN.  You  mean  during  the  last  year  T 

Mr.  O'DONNELL.  No,  sir ;  since  the  organization  of  the  board,  about  two  years  ago ; 
and  all  but  four  have  been  decided  in  favor  or  the  New  York  Central.  One  decision 
alone  against  the  road  took  out  of  their  treasury  $200,000  a  year,  and  will  for  all  time. 
(Testimony,  p.  41.)  , 

The  decision  referred  to  was  that  reducing  the  milk  rate  over  the 
Harlem  Railroad,  which  is  said  to  have  taken  $250,000  from  the  revenue 
of  the  road  the  first  year,  and  yet  was  promptly  obeyed. 

A  valuable  work  has  been  accomplished  by  the  board  in  securing  the 
adoption  by  all  the  roads  in  the  State  of  a  uniform  system  of  accounts 
and  reports.  Upon  this  point  Commissioner  Eogers  testifies  as» follows  : 

Perhaps  it  is  pertinent  to  say  that  one  of  the  principal  causes  leading  to  the  crea- 
tion of  this  commission  was  the  widespread  demand  for  publicity  of  railroad  trans- 
actions. It  appeared  to  be  the  idea  of  railroad  managers  to  operate  their  roads  in  a 
mysterious  way.  All  sorts  of  secret  compacts  were  made,  and  the  very  fact  that  there 
was  M«recy  gare  riae  to  the  opinion  that  there  might  be  some  great  abuse.  That 


INTERSTATE    COMMERCE.  77 

secrecy  revealed,  and  the  veil  pulled  aside,  a  large  proportion  of  the  grievances,  or 
the  supposed  grievances,  disappeared  spontaneously.  We  now  compel  railroads  to 
make  reports  to  us  of  a  very  elaborate  character ;  and,  in  addition  to  that,  we  com- 
pel them  to  make  a  quarterly  report  of  their  financial  condition  at  the  end  of  every 
three  months.  These  quarterly  reports  serve  as  mile-stones  through  the  year,  and 
tend  to  prevent  a  great  deal  of  that  corporate  mismanagement  that  has  taken  place 
heretofore,  such  as  the  secret  bondings  of  roads,  the  secret  issues  of  stock,  and  a 
thousand  and  one  things  of  that  sort.  (Testimony,  p.  30.) 

As  to  the  character  of  the  complaints  received,  it  is  said  by  the  board 
in  the  report  for  1884 : 

The  complaints  received  during  the  year  alleging  discriminations  as  between  per- 
>>oii8  are  generally  based  upon  the  ground  that  the  road  compels  the  shipper  to  con- 
tract to  ship  all  his  goods  by  the  road  in  question,  and  by  no  other  line  or  canal ; 
otherwise  he  is  charged  higher  rates  than  his  neighbor  or  competitor.  The  board 
condemns  all  such  contracts  on  grounds  of  public  policy. 

Commissioner  Rogers  further  testified  that  but  few  complaints  that 
local  rates  were  excessive  were  made,  or  that  one  man  received  less 
rates  than  his  neighbor.  He  thought  the  latter  grievance  had  been 
pretty  well  done  away  with.  The  following  extract  from  his  statement 
illustrates  the  methods  adopted  by  the  board  in  dealing  with  cases  in- 
volving the  reasonableness  of  the  rates  charged  : 

Mr.  EOGERS.  Where  complaint  is  made  that  too  much  is  being  charged  from  a  par- 
ticular point  the  method  in  which  our  commission  deals  with  it  is  this  :  We  take  up 
the  question  of  the  cost  of  the  construction  of  the  road,  we  find  out  how  much  it  has 
taken  to  build  it,  how  much  stock  and  how  many  bonds  are  out,  and  how  much  has 
gone  in  good  faith  into  the  construction  of  the  road.  We  then  take  their  revenues 
and  see  whether  those  revenues  are  paying  a  fair  rate,  after  the  costs  of  hauling  and 
handling  are  taken  out,  upon  the  cost  of  construction.  If  so,  we  reach  the  conclu- 
sion that  the  general  rates  upon  that  road  ought  not  to  be  diminished  under  the  guar- 
antee of  the  general  railroad  act. 

Senator  HARRIS.  What  do  you  assume  to  be  a  fair  rate  ? 

Mr.  ROGERS.  In  the  State  of  New  York  10  per  cent,  upon  the  capital  actually  ex- 
pended is  allowed  to  be  earned  by  law. 

Senator  HARRIS.  A  dividend  of  10  per  cent.  ? 

Mr.  ROGERS.  Yes,  sir ;  in  general  terms. 

Senator  PLAIT.  In  dealing  with  this  question,  do  you  call  the  "  cost  of  construc- 
tion "  what  the  company  represents  the  cost  of  construction  to  be,  or  do  you  try  to 
get  at  what  the  roatl  was  actually  constructed  for  T 

Mr.  ROGERS.  Wo  get  at  what  it  actually  was  constructed  for.  Of  course  we  cannot 
go  into  the  question  as  to  whether  they  paid  more  for  their  iron  or  their  ties  than  they 
really  ought  to  have  paid,  but  we  do  substautially  get  at  the  question  what  amount 
of  money  went  in,  and  take  out  the  "  water."  (Testimony,  p.  39.) 

The  practical  result  of  such  an  investigation  is  shown  in  the  case  of 
the  elevated  roads  in  New  York  City,  which  are  stocked  and  bonded  at 
$45,000,000.  The  commission  found  that  the  actual  cost  of  their  con- 
struction was  $22,080,000. 

During  its  brief  existence  the  commission  has  been  called  upon  to 
deal  with  important  questions  affecting  the  great  commercial  interests 
of  the  Empire  State.  The  illustrations  that  have  been  given  of  the  re- 
sults accomplished  warrant  the  conclusion  that  the  interests  of  the  peo- 
ple are  better  protected  than  they  were  before  the  creation  of  the  com- 
mission and  that  substantial  and  satisfactory  progress  has  already  been 
made  under  the  existing  system  towards  the  effective  regulation  of  the 
railroads  of  New  York. 


78  INTERSTATE    COMMERCE. 

GEORGIA. 

The  railroad  legislation  of  the  Southern  States  has  in  the  main  fol- 
lowed the  general  features  of  the  Georgia  system,  which  is  similar  to 
that  of  Illinois.  The  constitution  gives  the  general  assembly  power  to 
regulate  railroad  freight  and  passenger  tariffs,  prevent  unjust  discrim- 
inations, and  require  reasonable  rates,  and  it  is  made  its  duty  to  pass 
laws  for  these  purposes  and  to  enforce  the  same  by  adequate  penalties. 
The  general  assembly  is  prohibited  from  authorizing  any  corporation  to 
buy  shares  or  stock  in  any  other  corporation  in  the  State  or  elsewhere, 
or  to  make  any  contract  or  agreement  with  any  such  corporation  which 
may  have  the  effect  to  defeat  or  lessen  competition  in  their  respective 
businesses,  or  to  encourage  monopoly;  and  all  such  contracts  are  de- 
clared illegal  and  void.  Railroad  companies  are  prohibited  from  giving 
or  paying  any  rebate,  or  bonus  in  the  nature  thereof,  directly  or  indi- 
rectly; or  doing  any  act'  to  deceive  the  public  as  to  the  real  rates  re- 
ceived. Such  payments  are  declared  illegal  and  void,  and  the  general 
assembly  is  required  to  enforce  these  prohibitions  by  suitable  penalties. 

The  act  of  1879,  passed  to  carry  out  these  constitutional  require 
ments,  provided  for  the  appointment  by  the  governor  of  three  commis- 
sioners, their  term  of  office  to  be  six  years.  They  may  be  suspended  by 
the  governor  and  removed  if  a  majority  of  each  brandi  of  the  legis- 
lature concur.  They  are  prohibited  from  holding  any  railway  stock  or 
bonds,  being  agents  or  employe's,  or  having  any  interest  in  any  railway 
company  during  their  terms.  They  are  required  to  make,  to  be  ob- 
served by  all  railroads  doing  business  in  the  State,  reasonable  and  just 
rates  of  freight  and  passenger  tariffs,  reasonable  and  just  rules  and 
regulations  as  to  charges  at  all  points  for  handling  and  delivering 
freights,  for  preventing  unjust  discriminations  in  the  transportation  of 
freight  and  passengers,  for  charges  for  the  use  of  cars,  and  to  prevent 
the  paying  of  any  rebate  or  misleading  the  public  as  to  the  real  rates 
charged. 

The  commissioners  are  required  to  make  schedules  of  rates  for  each 
railroad,  and  to  change  and  revise  the  same  as  circumstances  may  re- 
quire. Such  schedules  shall  be  deemed  by  the  courts  as  sufficient  evi- 
dence that  the  rates  fixed  therein  are  just  and  reasonable,  and  the  rail- 
roads are  required  to  post  a  copy  at  all  of  their  stations.  The  commis- 
sioners are  required  to  investigate  the  books  and  papers  of  the  compa- 
nies and  to  personally  visit  their  offices  and  stations,  and  are  given 
power  to  examine  their  agents  and  employe's  under  oath,  to  see  if  the 
laws  are  complied  with.  All  contracts  and  agreements  between  rail- 
roads are  to  be  submitted  to  the  commission  for  inspection  and  correc- 
tion, and  all  agreements  as  to  division  of  earnings  by  competing  roads 
are  to  be  submitted  for  inspection  and  approval.  Any  such  agreements 
not  approved  by  the  commission  or  by  virtue  of  which  rates  exceeding 
those  fixed  are  charged  are  declared  illegal  and  void. 

Extortion  and  unjust  discrimination  are  prohibited.  Any  company 
violating  the  rules  and  regulation's  of  the  commission,  and  failing  after 
due  notice  to  make  full  recompense  for  the  injury  done  as  directed  by 
the  commission,  is  liable  to  a  penalty  for  each  offense  of  not  less  than 
$1,000  nor  more  than  $5,000,  actions  for  recovery  to  lie  in  the  county 
where  such  violation  occurred.  Any  person  injured  by  any  such  viola- 
tion is  given  a  right  of  action,  the  damages  to  be  the  same  as  between 
individuals,  except  that  in  cases  of  willful  violation  of  law  the  railroad 
companies  are  liable  to  exemplary  damages.  Officers,  agents,  and  em- 
ploye's of  railroads  who  refuse  to  furnish  any  report  required  by  the 


INTERSTATE    COMMERCE.  7b 

commissioners,  or  willfully  hinder  them  in  the  discharge  of  their  duties, 
are  made  liable  to  a  fine  of  from  $100  to  $5,000  for  each  offense.  It  is 
especially  provided  that  the  act  shall  not  be  taken  as  abridging  or  con- 
trolling the  rat'  s  on  freight  coming  from  or  going  beyond  the  bouuda-' 
ries  of  the  State  and  on  which  less  than  local  rates  are  charged. 

Commissioners  were  appointed  under  tliis  act  October  15,  1879,  the 
present  chairman,  Maj.  Campbell  Wallace,  being  one  of  the  original 
board.  The  records  show  that  the  action  of  the  commission  has,  from 
the  beginning,  been  cautious,  and  has  been  based  upon  close  investiga- 
tion and  an  intelligent  appreciation  of  the  interests  of  the  people  and 
of  the  railroads.  The  first  important  step  taken  was  the  promulgation 
of  a  provisional  "standard  tariff,"  the  idea  being  to  establish  a  standard 
and  make  such  modifications  in  the  case  of  each  road  as  seemed  advis- 
able. When  this  was  issued  the  board  called  upon  the  railroads  and 
the  people  to  show  cause  why  it  should  be  modified,  thus  practically 
placing  the  onus  of  complaint  upon  the  railroads  instead  of  upon  the 
public,  a  plan  which  brought  the  commission  valuable  and  exact  infor- 
mation. When  the  board  was  prepared  to  act  the  system  of  regulating 
rates  still  in  force  was  adopted.  This  consists  of  a  "standard  freight 
tariff,"  which  fixes  a  maximum  charge  per  hundred  pounds  on  the  vari- 
ous classes  of  freight,  for  each  10  miles,  up  to  400  miles,  and  also  similar 
special  rates  on  a  number  of  leading  products.  Taking  this  tariff  as 
the  standard  for  all  roads,  wherever  modifications  are  deemed  advisable, 
the  percentage  of  addition  or  deduction  allowed  on  particular  commodi- 
ties in  the  case  of  each  road  is  plainly  specified  in  the  list  which  follows, 
as  well  as  the  passenger  fare  allowed,  which  is  3  cents,  except  on  five 
roads,  where  the  rate  is  either  4  or  5  cents.  A  uniform  classification 
for  all  the  roads  is  also  a  part  of  the  standard  tariff,  which  is  made  com- 
plete by  a  series  of  twenty  general  u  freight  rules  and  regulations." 
This  plan,  it  will  be  seen,  admits  of  modification  very  readily,  and  any 
change  that  becomes  necessary  is  covered  by  issuing  a  circular  chang- 
ing the  rules  or  classification,  or  by  an  occasional  revision  of  the  tariff. 
The  number  of  changes  thus  made  has  averaged  about  ten  a  year. 

The  general  principles  followed  by  the  board  in  this  undertaking  are 
indicated  in  the  following  paragraphs  from  a  letter  to  the  Kentucky 
commission,  written  by  Major  Wallace,  November 24,  1881 : 

Under  the  law,  the  commission  recognize  their  duty  to  make  a  tariff  of  rates  that 
would  be  "just  and  reasonable  for  both  the  people  and  the  railroads."  We  recognize 
the  right  of  every  man  in  the  State  of  Georgia,  no  matter  where  located,  to  have  his 
freights  carried  at  "just  and  reasonable  "  rates,  to  be  fixed  in  accordance  with,  his  fa- 
cilities tor  transportaiou,  natural  or  artificial,  or  both. 

I  mean  this  :  A  community  having  more  railroads  than  one,  or  having  one  only  and 
a  navigable  water  course,  has  commercial  and  transportation  advantages  and  facili- 
ties that,  according  to  all  the  laws  of  trade  and  commerce,  do  not  accrue  to  a  com- 
munity or  an  individual  with  only  one  railroad,  or  simply  a  navigable  water  course. 
Now,  with  this  idea  governing  the  Georgia  commission,  we  recognize  the  right  of  every 
man  in  the  State  of  Georgia  to  select  his  own  market,  in  which  to  buy  his  supplies  or 
sell  his  products  without  obstruction  on  the  part  of  transportation  companies,  either 
in  the  form  of  unreasonable  and  unjust  rates  or  arbitrary  rules.  No  agreement  or  con- 
tract, expressed  or  implied,  among  or  between  such  companies,  should  be  permitted 
to  delay  or  interfere  with  the  shipment  of  freights  to  any  market,  or  over  any  route 
the  shipper  may  designate.  Division  of  the  earnings  or  the  quantities  of  tonnage  by 
a  stipulated  percentage  among  themselves  to  the  injury  of  shippers,  subjects  the  com- 
mon carrier  to  damages. 

The  shipper,  on  his  part,  must  be  content  with  the  advantages  or  disadvantages  of 


80  INTERSTATE    COMMERCE. 

his  commercial  location.  If  a  man  voluntarily  builds  his  house  on  the  top  of  a  hill,  he 
must  make  up  his  mind  when  he  goes  from  home  to  have  the  inconvenience  and  labor 
of  climbing  that  hill  when  he  returns.  If  a  man  raises  his  bale  of  cotton  10  or  20  miles 
from  a  railroad  station,  or  cultivates  his  land  on  the  banks  of  a  navigable  river,  or  on 
the  line  of  a  railroad  without  competition,  he  can  neither  expect  nor  rightfully  de- 
mand as  low  a.rate  of  freight  as  the  man  with  all  the  advantages  of  competition  ac- 
cruing to  him  by  a,  multiplicity  of  the  means  of  transportation.  If  the  former  gets 
the  "just  and  reasonable"  rates  contemplated  by  the  law  of  Georgia,  he  has  his  full 
rights,  not  only  under  the  law  of  his  State,  but  his  equitable  rights  under  the  law 
governing  commerce  adapted  to  his  location  and  transportation  facilities. 

To  carry  out  the  foregoing  general  views  as  near  as  practicable,  we  adopted  what 
we  dauo»in»te  a  standard  tariff  of  rates;  that  standard  varies  these  rates  from  the 
greater  to  the  less  rate  for  each  and  every  10  miles,  gradually  lessening  the  prorate  of 
charges  as  the  distance  increases,  always  considering  starting  and  terminal  expenses 
to  be  an  item  in  the  rate  fixed.  This  standard  of  rates  and  distances  is  made  to  apply 
to  the  real  necessities  of  the  people,  and  the  railroads  of  the  State,  by  a  percentage 
added  or  deducted ;  and  also  by  a  change  as  to  distance,  in  which  the  rate  shall  apply, 
adapted  to  each  road,  as  in  the  judgment  of  the  commissioners  may  be  just  and  rea- 
sonable to  the  shipper  and  carrier. 

In  1880  a  bill  was  filed  in  the  United  States  circuit  court  for  the 
northern  district  of  Georgia  by  George  H.  Tilley,  praying  that  the  com- 
missioners be  restrained  from  enforcing  their  rates  aud  regulations  on 
the  Savannah,  Florida  and  Western  Eailroad.  The  affidavit  filed  by  the 
commissioners  in  response  to  this  application  foriujunction  demonstrates 
very  clearly  the  thoroughness  with  which  they  had  investigated  the 
question  of  fixing  rates  and  the  exactness  of  their  knowledge  as  to  the 
condition  of  each  road.  This  statement  is  printed  in  the  second  semi- 
annual report  of  the  commission,  and  was  so  conclusive  that  the  court 
not  only  sustained  but  complimented  the  action  of  the  commissioners. 
Their  views  upon  the  vexed  question  of  the  profits  to  which  a  railroad 
is  entitled  were  expressed  as  follows : 

The  inquiry  "Upon  what  sum  should  a  given  road  pay  interest t"  involves  many 
and  nice  considerations.  Evidently,  in  the  opinion  of  the  commission,  the  value  of 
the  property,  as  distinguished  from  its  original  cost,  is  the  criterion.  But  to  deter- 
mine the  value  is  difficult.  Still,  practically,  this  determination  must  needs  be  fre- 
quently made  and  acted  on.  Valuation  is  necessary  annually  for  taxation— almost 
daily  for  sales  and  purchases — such  a  valuation  as  determines  practical  application. 

These  general  views  of  principles  and  facts  open  the  way  for  a  closer  discussion  of 
the  action  of  the  commission  and  its  reasons.  The  objects  as  set  forth  in  the  law 
were  twofold — the  prevention  of  extortion  and  unjust  discrimination.  *  *  *  The 
basis  of  estimate  as  to  what  is  j  ust  and  reasonable  may  be  briefly  set  forth  as  fol- 
lows, viz :  In  their  double  aspect  as  corporations  of  a  quasi-public  character,  and 
also  private  corporations  in  their  means  and  resources,  the  same  railroad  corporations 
are  entitled  to  a  reasonable  profit  on  the  value  of  their  corporate  property.  The 
value  must  be  ascertained,  not  merely  the  cost,  for  railroad  property,  like  all  others, 
fluctuates  in  value,  and  the  cost  is  but  an  element  or  factor  in  the  estimate  of  value. 

Various  methods  have  been  adopted  to  determine  value.  There  may  be  difficulties 
in  the  way  of  such  determination,  but  they  are  exactly  the  same  for  this  purpose  as 
for  all  others,  and  are  of  a  sort  that  feave  to  be  determined  for  other  purposes,  as,  say, 
for  taxation,  for  sale  or  purchase,  or  for  a  proper  report,  &c.  Practically,  an  esti- 
mate is  put  upon  the  property  in  every  respect  in  the  general  exhibit.  To  rectify 
this,  and  make  it  as  accurate  as  possible,  is  really  one  of  the  chief  duties  and  func- 
tions of  the  higher  officers,  who  profess  in  their  reports  to  give  information  to  the 
stockholders  and  the  public.  Without  entering  more  into  the  exact  means  of  esti- 
mating the  value,  it  may  be  remarked  that  the  proper  and  frequent  use  of  the  profit 


INTERSTATE    COMMERCE.  81 

and  loss  account  is  indispensable  to  reconcile  the  fluctuations  of  actual  value  for  in- 
formation and  for  action,  for  sale  and  taxation. 

Reports,  &c.,  are  intended  that  the  condition  of  the  corporation  should  be  intelli- 
gibly stated.  Huge  errors  of  the  most  practical  character,  and  disastrous  to  all  in- 
terests, arise  from  the  failure  to  do  this  thing.  The  huge  lumping  standing  item  with 
which  most  exhibits  begin,  "the  road  and  its  outfit,"  is  really  subject  to  these  very 
changes,  most  important  of  all  to  be  known  and  understood.  As  well  have  a  ther- 
mometer of  solid  contents  instead  of  quicksilver,  and  complain  that  it  is  too  trouble- 
some to  use  one  with  liquid.  This  is  the  final  result,  the  resultant  of  all  book-keep- 
ing, and  needs  to  move  up  and  down  according  to  the  facts — the  value  meter.  Upon 
this  value  (as  actual  and  important,  though  an  annual  estimate  will  perhaps  suffice) 
a  reasonable  profit  is  to  be  made.  This  profit  is  the  excess  of  the  earnings  over  the 
operating  expenses.  The  measure  of  its  reasonableness  is  another  thing  to  be  de- 
termined, and  this  depends  upon  the  general  profits  of  other  investments  of  capital. 
It  should  generally  be  such  a  profit  as  to  embrace  legal  interest  and  a  certain  increase 
for  the  risks  of  stocks  as  compared  with  bonds.  Probably  in  Georgia  about  8  per  cent., 
7  per  cent,  interest  and  1  percent,  insurance.  This  profit  should  be  the  excess  of  earn- 
ings over  expenses  with  average  economy  of  management.  If  the  road  is  managed 
with  superior  skill  it  is  entitled  to  the  gain  thereby  effectei  ;  if  without  properecon- 
omy,  the  profits  mast  be  reduced,  the  loss  and  waste  to  fall  where  it  belongs,  on  the 
poor  management. 

It  has  been  our  aim  constantly  to  reduce  the  domain  of  mere  conjecture  and  to 
enlarge  that  of  calculation.  With  a  proper  system  of  book-keeping  and  tabulation,  not 
less  important,  the  question  of  reasonable  rates  can  be  made  about  as  soluble  as  many 
other  practical  questions,  and  much  more  certain  than  the  conjecture  and  fluctuating 
and  guessing  work  actually  resorted  to.  The  fact  that  it  is  difficult  argues  more  dil- 
igence in  solution  instead  of  more  guess-work. 

A  comprehensive  statement  of  the  difficulty  experienced  by  the  citi- 
zen in  enforcing  his  common-law  rights  and  of  the  necessity  for  such  an 
additional  remedy  as  the  commission  system  affords  was  given  in  the 
report  of  1881,  as  follows  : 

Prior  to  the  act  of  1879  the  common-law  right  of  the  citizen  to  be  protected  against 
extortion  and  unjust  discrimination  existed  in  its  full  force;  but  the  remedy  for  its 
violation  was  wholly  inadequate.  Practically  the  citizen  had  no  rights,  though  his 
theoretical  right  was  ample  and  complete. 

The  rights  of  the  railroad  companies  were  well  defined  enough,  and  their  remedies 
also  were  adequate,  being  in  their  own  hands.  It  was  their  capacity  for  abusing 
their  powers  which  was  not  sufficiently  held  in  check. 

In  the  very  nature  of  the  case,  the  citizen  stood  at  such  a  disadvantage  that  his 
rights  were  merely  nominal.  To  illustrate :  Suppose  him  to  receive  a  package  on 
which  the  actual  freight  charge  was  $1.50,  while  a  just  and  reasonable  rate  would  be 
but  f  1.  What  could  he  do  ?  Usually  he  could  not  wait,  but  must  pay  the  $1.50  under 
protest,  and  bring  suit  afterwards,  if  he  thought  it  wortt  his  while,  for  the  half-dollar 
overcharge.  But  could  he  aftbrd  so  do  this  f  His  interest  in  the  matter  would  not 
warrant  the  expense — the  costs,  fees,  witnesses,  the  discussion  of  the  principles  and 
facts  involved  as  to  what  rate  would  be  reasonable  and  just  in  the  particular  case. 
And  only  the  one  case  would  be  settled  after  all.  The  next  day  a  parcel  would  be 
charged  75  cents,  worth  but  50,  and  the  25  cents  would  involve  a  new  suit.  Practi- 
cally he  was  obliged  to  submit.  Were  it  a  merchant  who  overcharged  him,  he  would 
transfer  his  trade  to  another  house.  But  in  dealing  with  the  railroad  he  is  dealing 
usually  with  a  monopoly,  unless  at  a  competing  point — and  now  even  at  such  a  point 
by  reason  of  pooling— and  so  he  was  remediless.  A  litigation  would  usually  settle 
but  a  single  case— one  class  ;  one  distance — scarcely  any  principle  at  all. 

Such  was  the  attitude  of  the  citizen.  Consider  next  the  attitude  of  the  railroad 
prior  to  the  act  of  1879. 

S.  Rep.  10 I! 


/ 


82  INTERSTATE    COMMERCE. 

It  had  a  large  interest  iii  results.  Instead  of  50  cents  multiplied  by  1  (the  citi. 
zen's  interest)  the  railroad  had  GO  cents  multiplied  by  1,000  or  100,000  as  its  interest. 
It  would  have  also  ample  experience,  and  the  best  legal  talent  already  engaged  and 
trained  and  waiting,  and  all  the  experts  favorably  inclined. 

So  unequally  were  the  parties  matched  that  in  the  whole  history  of  the  State 
there,  has  been  (so  far  as  we  remember)  not  one  single  case  of  a  suit  by  a  citizen  to 
enforce  this  common-law  right — and  but  one  to  enforce  even  a  statutory  right  for  an 
overcharge.  In  that  case  the  charter  of  the  railroad  in  express  terms  limited  the 
rates,  yet  the  railroads  fixed  its  rates  beyond  the  chartered  limit,  printed  them  and 
collected  them,  and  was  checked  by  this  suit. 

A  remarkable  commentary  on  the  absolute  worthlessness  of  rights  without  reme- 
dies. 

The  consciousness  of  this  huge  disparity  between  the  parties  is  the  great  reason 
why  juries  lean  toward  the  weaker  side.  Notwithstanding  all  this,  however,  unless 
the  sum  iuvolved  was  large,  say  a  suit  for  life,  or  limb,  or  injury,  the  party  ag- 
grieved would  not  enter  into  so  formidable  a  controversy,  even  with  the  sympathy  of 
the  jury  in  his  favor. 

Indeed,  the  case  was  not  prepared  for  jury  trial.  As  well  turn  a  jury  loose  into 
a  great  pile  of  copartnership  or  bank  books  to  strike  a  balance  as  into  the  complex 
principles  and  facts  involved  in  rates  of  freight  without  some  report  like  that  of  a 
master  in  chancery  as  the  basis  of  decision. 

Now  all  this  has  been  in  large  measure  remedied  by  the  act  of  1879,  and  adequate 
provision  made  also  for  such  a  report,  so  that  the  parties  can  stand  on  a  level. 

The  third  report  of  the  commission  contained  an  elaborate  discussion 
of  the  principles  governing  the  right  of  regulation,  of  the  respective 
rights  of  the  citizen  and  the  railroad,  of  the  provisions  of  the  law  cre- 
ating the  commission,  and  of  their  powers,  obligations,  and  duties  under 
it.  Eii  the  report  submitted  to  the  governor  October  15, 1882,  it  is  said  : 

The  constitutionality  of  the  law  creating  this  commission  has  been  settled  in  the 
minds  of  all  thinking  people.  The  experiment  which  Georgia  has  made  has  been  suc- 
cessful; and  the  law,  as  it  now  exists,  is  believed  by  not  only  our  own,  but  by  other 
States,  to  be  sufficient  for  the  accomplishment  of  the  purposes  for  which  it  was  en- 
acted. "  *  *  Experience  has  proved  that  the  transportation  companies  need  a 
power  over  them  which  will  curtail  their  growing  extravagance  and  lessen  their 
current  expenses  for  the  benefit  of  their  own  stockholders.  The  people  need  a  power 
sufficient  to  control  these  corporations  and  prevent  excessive  and  discriminating  rates, 
growing  out  of  loose  and  extravagant  management.  »  «  *  Apprehensions  that 
the  commissioners  might  abuse  their  powers  have  ceased  to  exist.  There  is  a  feeling 
of  confidence  that  no  combination  of  capital,  either  home  or  foreign,  invested  in  rail- 
roads can  materially  injure  or  affect  the  public  interest  so  long  as  transportation  is 
wisely  and  prudently  regulated  by  law. 

Railroad,  manufacturing,  mining,  agricultural,  and  every  other  material  interest 
have  within  the  past  three  years  received  a  remarkable  impetus  in  Georgia.  Confi- 
dence in  the  stability  of  the  value  of  every  species  of  property  in  this  State,  and  in 
our  progressive  prosperity  as  a  people,  is  greater  than  ever  before. 

All  predictions  that  the  action  of  the  railroad  commission  of  Georgia  would  para- 
lyze the  railroad  interests  of  the  country  have  failed.  An  experience  of  three  years 
of  the  practical  operations  of  railroads  in  this  State,  under  the  supervision  of  law,  has 
for  that  period  shown  largely  increased  revenues  to  the  railroads,  larger  dividends  to 
the  railroad  stockholders,  higher  prices  for  railroad  shares,  greater  volume  of  busi 
ness,  largely  stimulated  travel,  greatly  increased  tendency  to  invest  capital  in  our 
State,  more  miles  of  railroad  built  and  being  built  in  Georgia,  and  corresponding  bene- 
fits to  the  public  generally,  and  the  railroad  authorities  and  the  people  on  better  terms 
with  each  other  than  ever  before  during  a  similar  period  in  our  history. 


INTERSTATE    COMMERCE.  83 

It  is  stated  in  the  same  report  tbat  the  action  of  the  commission,  in 
refusing  to  advance  t lie  rates  on  cotton  to  those  agreed  upon  by  the 
pooled  lines  of  the  South,  saved  the  cotton  producers  of  the  State  that 
season  more  than  half  a  million  of  dollars. 

Again,  in  October,  1884,  the  commissioners  say  of  their  wi»rk: 

We  think  tliat  it  can  lie  justly  claimed  that  a  fair  and  impartial  review  of  the  work 
of  the  commission  in  carrying  out  the  purposes  of  the  law  by  a  reduction  and  equali- 
zation of  rates  that  were  of  force  by  the  railroad  companies  at  the  time  of  its  pas- 
sage will  show  a  saving  to  the  people  of  Georgia,  annually,  of  a  suiu  equal  to  the 
full  amount  of  their  annual  taxes,  while  the  healthy  financial  condition  of  the  rail- 
roads does  not  indicate  that  they  have  been  injured  thereby. 

A  general  view  of  the  work  of  the  commission  and  its  results  is  also 
given  in  the  testimony  of  Alaj.  Campbell  Wallace,  who  appeared  before 
the  committee  at  Atlanta.  (Testimony,  p.  1416). 

ALABAMA. 

The  constitution. of  Alabama,  adopted  in  1875,  declared  all  railroads 
and  canals  public  highways  and  common  carriers.  Kailroads  were 
given  the  right  to  intersect,  connect  with,  or  cross  any  other  railroad, 
and  required  to  receive  and  transport  each  others'  freight,  passengers, 
and  cars,  loaded  or  empty,  without  delay  or  discrimination.  The  gen- 
eral assembly  was  required  to  pass  laws  to  correct  abuses,  and  prevent 
unjust  discrimination  and  extortion  in  freight  and  passenger  rates  on 
railroads,  canals,  and  rivers.  The  granting  of  free  passes  or  selling 
tickets  at  a  discount  to  any  member  of  the  general  assembly,  or  any 
person  holding  office  under  the  State  or  United  States,  other  than  as 
sold  to  the  public  generally,  by  any  transportation  company,  was  pro- 
hibited. 

By  an  act  approved  February  26,  1881,  the  present  railroad  commis- 
sion was  established.  The  statute  prohibits  extortion  and  unjust  dis- 
crimination. Twice  the  amount  of  damages  sustained  by  reason  of 
overcharge  or  unjust  discrimination,  with  attorney's  fee,  may  be  re- 
covered. Only  actual  damages,  and  no  attorney's  fee,  can  be  recovered 
if  the  court  finds  that  the  service  was  performed  at  rates  previously 
approved  by  the  commission,  and  in  suits  concerning  rates  not  higher 
than  those  approved  by  the  commission,  the  plaintiff,  if  he  fail,  must  pay 
the  costs  and  an  attorney's  fee  to  defendant. 

The  penalty  for  willful  extortion  is  a  tine  of  from  $10  to  $500  for  each 
offense,  but  extortion  cannot  be  deemed  willful  unless  committed  by  a 
corporation  which  has  refused  to  submit  its  tariff  to  the  commission  or 
to  conform  to  its  requirements.  In  the  defense  of  such  suits  the  ap- 
proval of  the  commission  is  prima  facie  evidence  that  the  rates  approved 
are  not  extortionate.  The  act  declared  that  rates  should  not  be  con- 
sidered extortionate  if  the  net  earnings  of  the  railroad  for  transporting 
freights  without  discrimination  on  the  basis  of  such  charges,  with  its 
net  earnings  from  passenger  and  other  traffic,  would  not  amount  to 
more  than  a  fair  and  just  return  on  the  value  of  the  road.  Actions  for 
damages  must  be  commenced  within  ninety  days  after  the  cause  of 
action  accrues.  The  railroads  must  publish  their  rates  by  posting  them 
at  all  depots,  and  must  not  make  any  reduction  or  rebate  from  the  pub- 
lished tariff  which  is  not  given  to  all  persons  and  corporations.  The 
act  permitted  special  rates  to  be  given  to  any  person  or  corporation  to 
aid  in  developing  any  industrial  enterprise,  but  required  them  to  be 
posted.  The  penalty  fixed  for  giving  a  rebate  was  a  tine  of  from  $10  to 
$500,  to  which  persons  who  should  knowingly  receive  the  benefit  of 


84  INTERSTATE    COMMERCE. 

such  reduction  were  also  made  liable.  Any  company,  however,  may 
carry  freight  free.  The  governor  nominates  three  persons  for  president 
of  the  commission  and  six  for  associate  commissioners,  from  which  list 
the  senate  elects  the  president  and  two  associate  commissioners,  to 
serve  two  years.  The  acceptance  by  a  commissioner  of  any  gift,  emol- 
ument, employment,  or  gratuity  from  any  railroad  works  a  forfeiture  of 
his  office. 

It  is  the  duty  of  the  commissioners  to  revise  all  tariffs  submitted  to 
them.  If  the  charges  are  unreasonable  or  amount  to  unjust  discrimina- 
tion against  any  person,  locality,  or  corporation,  the  commission  is  re- 
quired to  notify  the  company  of  the  changes  deemed  necessary,  and 
when  they  have  been  made  to  certify  its  approval  of  such  tariff.  They 
are  required  to  hear  all  coinpaints  against  such  tariffs  and  notify  the 
roads  of  any  changes  deemed  proper.  The  railroads  are  required  to 
make  returns  for  purposes  of  taxation  to  the  State  auditor,  who  issues 
licenses  to  operate  the  roads  for  one  year  on  presentation  of  the  State 
treasurer's  receipt  for  taxes  and  satisfactory  evidence  that  the  company 
is  prepared  to  transport  freight  and  passengers  with  reasonable  safety. 
The  penalty  for  operating  without  a  license  is  $100  for  each  day  so  en- 
gaged, one  half  the  penalty  to  go  to  the  person  suing  for  the  same. 

The  commission  is  required  to  give  notice  in  writing  to  a  company 
whenever  repairs  or  improvements  are  necessary,  or  changes  in  rates 
or  its  manner  of  conducting  its  business  are  expedient,  and  to  report 
the  facts  to  the  legislature.  The  commissioners  are  required  to  keep 
informed  as  to  the  condition  and  management  of  the  railroads,  and  to 
recommend  such  measures  and  regulations  as  they  deem  conducive  to 
the  public  safety  and  interest.  The  managers  of  the  railroads  are  re- 
quired to  furnish  the  commission  with  all  information  required  relative 
to  the  management  of  their  lines,  and  to  make  annual  returns  in  the 
manner  prescribed  by  the  commission,  under  penalty  of  a  fine  of  $50 
for  each  day  of  refusal. 

Accidents  attended  with  any  serious  personal  injury  must  be  reported 
within  twenty-four  hours  after  their  occurrence  to  the  commissioners, 
who  may  inquire  into  the  circumstances  and  state  their  conclusions  in 
their  annual  report.  They  may  examine  witnesses  under  oath  relative 
to  the  affairs  of  any  railroad  company,  the  penalty  for  refusing  to  testify 
or  obstructing  the  commissioners  in  the  discharge  of  their  duties  being 
a  fine  not  exceeding  $1,000  or  imprisonment  not  exceeding  one  year,  or 
both.  On  application  of  a  director  or  persons  owning  one-fiftieth  part 
of  the  stock  or  bonds  of  any  company,  the  commissioners  may  examine 
into  its  financial  condition  and  publish  the  same. 

The  supplementary  acts  passed  in  1883  made  it  the  duty  of  the  com- 
missioners to  recommend  joint  local  rates  to  railroads  on  freight  in  all 
cases  where  such  railroads  consisted  of  a  combination  of  roads  under 
one  management,  or  were  connecting  lines,  so  as  to  avoid  as  far  as 
possible  the  injustice  of  combined  local  rates  over  said  lines,  and  to  make 
no  recommendation  which  would  not  allow  the  companies  fair  and 
reasonable  compensation  for  the  services  performed.  Pooling  for  the 
purpose  of  preventing  free  competition  and  establishing  extortionate 
rates,  and  which  should  have  the  effect  of  being  in  undue  restraint  of 
trade  and  business  at  any  station,  town  or  city,  is  prohibited,  Officers 
or  agents  of  any  company  violating  this  provision  are  made  liable  to  a 
fine  of  from  $50  to  $200  for  each  offense.  The  act  is  declared  to  apply 
to  pooling  agreements  made  outside  the  State,  but  to  be  performed  in 
whole  or  in  part  in  the  State.  Agreements,  rates,  or  pool  arrangements 
made  to  cheapen  freight  rates  or  extend  additional  facilities  to  the 


INTERSTATE    COMMERCE.  85 

public  generally,  and  wbich  aie  not  extortionate  or  ID  uudae  restraint  of 
trade  at  auy  town,  city,  or  station,  are  not  prohibited,  and  when  they 
have  the  certified  approval  of  the  commission  such  agreements,  rates  or 
pool  arrangements  must  be  deemed  prima  facie  lawful,  and  no  person 
is  liable  to  prosecution  for  aiding  in  carrying  them  out. 

By  another  act  the  determination  of  any  matter  by  the  commission 
is  made  prima  facie  evidence  in  all  proceedings  that  such  determination 
was  right  and  proper. 

Jt  appears  from  the  reports  of  the  commissioners  that,  after  consid- 
erable opposition,  they  revised  the  freight  and  passenger  tariffs  of  every 
railroad  in  the  State,  and  that  their  tariffs  went  into  operation  on  all 
the  roads,  and  were  generally  satisfactory.  In  their  second  annual 
report  the  commissioners  state  that  no  railroad  company  failed  or  re- 
fused to  adopt  and  put  into  effect  any  recommendation  made  by  them, 
and  say: 

This  whole  subject  of  the  regulation  of  the  business  of  railroads  by  the  State  is  one 
which  is  full  of  inherent  difficulties  and  surrounded  by  many  embarrassments.  It  is 
of  recent  origin,  and  yet  the  march  of  events  forced  it  upon  the  most  enlightened 
nations  of  Europe  and  a  majority  of  the  States  of  the  American  Union.  None  of 
these  nations  or  States  that  have  undertaken  it  have  receded  from  this  governmental 
work.  Time  and  experience  are  uecessary  to  develop  aud  reduce  it  to  a  thoroughly 
arranged  and  complete  system.  The  reformers  who  propose  by  heroic  remedies  to 
accomplish  complete  wonders  in  a  day  or'not  at  all  will  find  a  more  successful  field 
of  operation  somewhere  else  than  in  dealing  with  this  subject.  No  statutes,  however 
wise,  patriotic,  or  well  considered,  will  in  themselves  accomplish  the  work,  and  a 
tinkering  and  meddlesome  administration  of  such  statutes  certainly  will  not.  To 
make  such  regulation  just  and  beneficial,  worthy  of  a  great  State  and  promotive  of 
its  prosperity  and  the  welfare  of  all  who  are  entitled  to  the  protection  of  its  laws, 
this  supervision  must  be  exercised  by  an  administration  of  such  statutes,  character- 
ized by  a  spirit  of  justice,  firmness,  and  patience. 

The  present  commissioners,  in  a  letter  to  the  chairman  of  the  com- 
mittee, under  date  of  November  2,  1885,  say : 

There  were  pending  before  the  last  general  assembly  of  Alabama  several  bills  hav- 
ing for  their  scope  and  purpose  the  further  regulation  and  control  of  railroads  in 
Alabama,  but  none  of  them  received  favorable  action  from  the  general  assembly,  and 
all  were  defeated. 

The  administration  of  the  law  creating  the  commission  has  given,  so  far  as  we  are 
advised,  satisfaction  in  the  main  to  the  railroad  companies  and  to  the  people. 

ARIZONA  TERRITORY. 

The  Territory  of  Arizona  realizes  the  necessity  of  railroads  to  aid  in 
its  development,  and  such  legislation  as  has  been  enacted  has  been  cal- 
culated to  encourage  the  construction  of  railroads,  not  to  regulate  their 
management. 

ARKANSAS. 

There  has  been  very  little  legislation  in  Arkansas  looking  to  the  reg- 
ulation of  the  business  of  railroad  transportation.  An  act  passed  in 
1873  limited  the  charges  for  the  transportation  of  passengers  by  rail- 
roads in  that  State  to  5  cents  per  mile  for  first  class  and  3  cents  for 
second  class,  and  required  the  roads  to  furnish  sufficient  first  and  sec- 
ond class  cars  for  the  accommodation  of  the  traveling  public.  The 
rates  on  freight  were  limited  to  50  cents  per  hundred  pounds  on  "heavy 
articles  "  and  10  cents  per  cubic  foot  on  "  articles  of  measurement "  for 


86  INTERSTATE    COMMERCE. 

every  100  miles,  and  in  like  proportion  for  a  shorter  distance.  Should 
the  railroad  charge  more  than  these  maximum  rates  it  was  made  liable 
to  pay  to  ihe  party  injured  or  to  the  consignees  of  freight  double  the 
amount  so  overcharged.  A  subsequent  act  made  the  penalty  for  over- 
charging $100. 

An  act  passed  in  1881  fixed  the  rates  on  railroads  not  exceeding  50 
miles  in  length  at  not  exceeding  10  cents  per  mile  for  each  passenger 
and  40  cents  per  hundred  pounds  for  freight.  It  was  also  provided  that 
rates  on  such  roads  could  be  reduced  by  the  railroad  commissioners 
whenever  the  net  annual  profits  of  a  road  exceeded  10  per  cent,  on  the 
capital  actually  invested. 

The  railroad  commission  has  consisted  of  different  State  officers,  and 
its  principal  duty  has  been  to  ascertain  the  value  of  all  railroad  prop- 
erty in  the  State  and  make  the  assessment  for  purposes  of  taxation. 
By  the  revision  of  the  revenue  laws,  adopted  in  1883,  the  commission 
consists  of  the  governor,  secretary  of  state,  and  auditor  of  public  ac- 
counts. 

CALIFORNIA. 

California  is  the  only  State  which  has  adopted  the  commission  system 
as  a  part  of  the  organic  law  of  the  State.  The  constitution  of  1879  is 
extremely  rigid  in  its  provisions  for  Jhe  regulation  of  railroads.  It  de- 
clares all  railroad,  canal,  and  transportation  companies  common  car- 
riers and  subject  to  legislative  control,  and  requires  railroads  to  receive 
and  transport  each  other's  passengers,  tonnage,  and  cars  without  delay 
or  discrimination.  Ht  prohibits  the  granting  of  passes  to  any  person 
holding  any  office  oT  honor,  trust,  or  profit  in  the  State,  and  the  ac- 
ceptance of  such  pass  by  a  member  of  the  legislature  or  any  public 
officer  other  than  the  railroad  commissioners,  works  a  forfeiture  of  his 
office!]  Pooling  between  common  carriers  or  by  them  with  the  owner  of 
any  vessel  touching  at  ports  in  the  State  is  prohibited.  When  rates 
are  lowered  for  the  purpose  of  competition,  the  corporations  are  prohib- 
ited from  raising  them  again  without  the  consent  of  the  governmental 
authority.  Discriminations  in  charges  or  facilities  between  places  or 
persons,  or  in  facilities  for  the  transportation  of  the  same  classes  of 
freight  or  passengers  within  the  State,  or  coming  from  or  going  to  any 
other  State,  are  prohibited.  Eailroads,  transportation  companies,  and 
individuals  are  required  to  deliver  persons  and  property  at  any  station, 
landing,  or  port,  at  charges  not  exceeding  their  charges  for  transport- 
ing persons  and  property  of  the  same  class  in  the  same  direction  to  any 
more  distant  station,  port,  or  landing. 

The  State  is  divided  into  three  districts,  in  each  of  which  one  com- 
missioner is  elected  every  four  years.  They  must  not  be  interested  in 
any  railroad  company  or  other  transportation  company  as  stockholder, 
creditor,  agent,  attorney,  or  employed  They  are  given  power  and  it  is 
made  their  duty  to  establish  rates  of  passenger  and  freight  charges,  to 
hear  and  determine  complaints,  to  send  for  persons  and  papers,  to 
take  testimony  and  to  punish  for  contempt  to  the  same  extent  as  courts 
of  record,  and  to  enforce  their  decisions  and  correct  abuses  through  the 
medium  of  the  courts.  They  are  required  to  prescribe  a  uniform  system 
of  accounts  for  all  transportation  companies.  The  penalty  for  failing 
to  conform  to  the  rates  fixed  by  the  commissioners  or  for  charging  in 
excess  thereof,  or  for  failing  to  keep  accounts  as  prescribed  by  them  is 
a  fine  of  not  exceeding  $20,000  for  each  offense,  and  the  officers,  agents, 
and  employes  are  made  liable  to  a  fine  not  exceeding  $5,000  or  imprison- 


INTERSTATE    COMMERCE.  87 

ment  not  exceeding  one  year  for  violating  these  provisions.  Jn  all  civil 
or  criminal  proceedings  the  rates  established  by  the  commissioners  are 
to  be  deemed  conclusively  just  and  reasonable,  and  exemplary  damages 
may  be  allowed  in  actions  for  damages  by  excessive  rates.  The  legis- 
lature is  given  power  to  enforce  these  constitutional  provisions  by  the 
forfeiture  of  charters,  and  to  confer  such  further  powers  on  the  com- 
missioners as  may  be  necessary  for  the  performance  of  the  duties  en- 
joined on  them.  Legislation  in  accordance  with  the  requirements  of  the 
constitution  has  been  enacted. 

It  appears  from  the  commissioners'  report  for  1882  that  the  question 
of  regulating  the  charges  of  common  carriers  received  consideration  in 
the  legislature  as  early  as  1865,  but  did  not  take  shape  until  1876,  when 
a  law  was  enacted  providing  for  the  appointment  of  three  commissioners 
with  power  to  inspect  the  railroads,  hear  complaints,  settle  differences, 
and  enforce  penalties  for  extortion  and  unjust  discrimination.  This  law 
made  the  tariffs  in  force  on  the  1st  day  of  January  preceding  its  pas- 
sage the  maximum  rates.  The  commission  thus  established  continued 
the  execution  of  its  duties  under  this  and  an  amended  act  until  January 
1,  1880,  when  it  gave  place  to  one  chosen  in  accordance  with  the  new 
constitution. 

The  new  commissioners  devoted  the  first  year  to  the  inspection  of  the 
railroads  of  the  State,  the  examination  of  their  tariffs,  and  the  hearing 
of  complaints  at  thirty-one  cities  and  towns  visited.  They  were  expected 
to  make  sweeping  reductions  in  rates,  but  after  a  year's  investigation 
of  the  subject  they  reached  the  conclusion  that  an  arbitrary  regulation 
of  railroad  charges  is  not  only  unjust  to  the  railroads,  but  full  of  danger 
to  the  public,  and  they  endeavored  to  make  such  an  adjustment  of  rates 
as  would  be  just  to  both  sides  alike.  In  their  report  for  1882  the  com- 
missioners, after  reviewing  the  subject  of  rates  in  its  relation  to  the 
shipper,  the  transportation  company,  and  the  general  public,  express  the 
conclusion  that  the  establishment  of  inflexible  relations  between  shipper 
and  carrier  is  impracticable  and  would  work  injury  to  both,  ami  that 
their  enforcement  would  upset  commercial  values  and  destroy  confi- 
dence, the  true  policy  being  to  give  the  greatest  possible  freedom  to  in- 
dividual action,  consistent  with  the  rights  of  others  equally' free. 

The  report  for  1883  indicates  such  a  disagreement  between  the  three 
present  commissioners,  although  all  elected  by  the  same  party,  that 
majority  and  minority  reports  were  submitted  to  the  governor.  The 
majority  say  of  the  commission  : 

As  one  of  the  constitutional  offices  of  the  State,  of  comparatively  recent  origin,  be- 
ing now  in  the  first  year  of  its  second  administration,  it  can  hardly  be  said  to  have 
outlived  its  possible  usefulness.  But  it  must,  like  every  branch  of  republican  gov- 
ernment, at  the  peril  of  its  life,  vindicate  its  right  to  exist.  This  can  be  done  in  two 
ways — by  theory  and  results.  In  theory,  the  exercise  of  a  power  conferred,  in  the 
.mode  prescribed,  by  a  majority  of  one,  is  "  deemed  conclusively  just  and  reasonable." 
As  this  presumption  follows  and  attaches  to  official  acts  and  their  probable  results, 
their  opponents  have  found  it  safest  not  to  wait  for  them.  Hence  the  frequency  of 
foregone  conclusions  against  the  law  and  the  facts. 

But  if,  neither  rashly  presuming  upon  its  position  and  precedence  before  the  courts, 
nor  leaning  upon  incompetent  authority,  nor  deferring  to  any  unauthorized  censor- 
ship of  its  course,  it  has  promptly  substituted  for  the  facile  routine  of  inconsequen- 
tial resolutions  a  thoroughly  consistent  and  advancing  plan  of  action,  by  methods 
and  measures  within  the  purview  of  the  organic  and  statute  law,  it  will  find  in  the 
legitimate  instruments  of  its  authority  the  ready  weapons  of  its  defense.  If  it  has 
resolutely  taken  the  subject-matters  of  its  jurisdiction  out  of  partisan  politics,  and 
without  fear,  favor,  or  undue  influence,  has  administered  them  as  public  trusts  in  the 


88  INTERSTATE    COMMERCE. 

interest  of  all  concerned,  it  has  subserved  one  leading  and  paramount  purpose  of  its 
creation.  If,  never  prejudging  any  cause  or  question  submitted  for  its  decision,  it 
has  inflexibly  adhered  to  the  law  and  the  facts,  it  need  not  fear  the  ultimate  judgment 
of  those  having  an  honest  interest  in  its  administration,  and  can  afford  to  wait  for  the 
justice  it  has  done  to  others. 

They  then  proceed  to  discuss  the  administrative  and  remedial  pow- 
ers of  the  commission,  as  defined  by  the  constitution  and  statutes,  and 
the  methods  and  measures  they  have  adopted.  It  is  shown  that  the 
•constitution  confers  the  power  and  imposes  the  duty  to  establish  and 
publish  rates,  and  that  the  commission  is  also  given  judicial  power  to 
hear  and  determine  complaints  to  the  same  extent  as  courts  of  record. 
Then  they  say — 

By  these  sections  of  the  constitution  and  statutes  "  rates,"  "rates  of  charge,"  and 
*'  change  of  rates,"  are  a  dozen  times  repeated  and  made  the  burden  of  investigation 
and  regulation,  orders  and  schedules.  It  follows  that  extortions  and  discriminations 
are  not  to  be  remedied  by  sweeping  and  perfunctory  declarations  that  they  exist  and 
ought  to  be  forbidden,  but  by  reforming  the  rates  in  which  they  are  found.  To  avoid 
the  plodding  process  of  examination,  it  is  possible  to  assume  without  proof  or  knowl- 
edge, as  is  often  done,  that  all  are  excessive,  and,  therefore,  extortionate.  But  that 
«H  are  unequal,  and,  therefore,  discriminative,  is  a  solecism  too  palpable  to  be  excused 
on  the  score  of  any  negligence  or  ignorance.  And  absurd  as  it  is,  it  is  no  more  so 
than  the  correlative  proposition  that  unequal  rates  can  be  equalized,  and  discrimin- 
ations eliminated  therefrom,  by  uniform  reductions. 

While  discarding  these  absurdities,  the  commission  has  settled  down  to  its  work 
upon  the  theory  that  extortion  may  be  predicated  of  each  separate  rate  or  class  of  rates, 
and,  if  found  to  be  too  high,  reduction  to  reasonable  compensation  is  the  rightful 
remedy  ;  and  as  discrimination  can  be  affirmed  only  of  two  or  more  rates  for  similar 
equal  services,  and  consists  in  their  inequality,  the  only  possible  remedy  is  by  changes 
up  or  down,  to  adjust  them  to  each  other  and  to  the  service.  If  it  is  only  when  rates 
are  thus  "  established  or  adopted, "  changed  or  regulated,  reduced  or  equalized,  by 
lawful  orders  and  schedules  (which,  if  not  waived,  are  imperatively  required),  that 
they  are  to  be  "deemed  conclusively  just  and  reasonable,"  it  follows  that  then,  and 
not  till  then,  can  fines  or  forfeitures  for  their  violation  be  recovered  or  enforced. 

This  much  debated  function  of  the  commission  is  defined  and  guarded  with  excep- 
tional clearness  in  the  constitution,  and  concerning  it  there  should  be  no  confusion 
of  ideas  or  purposes.  Its  subject-matters  are  "rates"  and  "rates  of  charge;"  its 
ultimate  purpose,  "to  establish  or  adopt,"  or  "change"  them  "from  time  to  time," 
so  as  to  eliminate  therefrom  discriminative  inequalities  and  extortious  ;  its  modes  of 
procedure,  investigations  and  comparisons,  orders  and  schedules.  Each  and  every 
one  of  eighty  thousand  existing  rates,  in  its  relations  to  all  the  rest,  and  to  the  gov- 
erning factors  of  transportation,  is  the  subject  of  investigation.  What  it  ought  to  be, 
the  relative  cost  and  conditions  of  the  service  being  considered,  is  the  question  to  be 
decided.  That  it  ought  to  be  reasonable  compensation  for  the  service,  it  would  be 
unreasonable  to  question ;  and  this  is  the  necessary  and  conclusive  inference  of  the 
constitution.  For,  as  it  ordains,  if  rates  of  charge  established  by  the  commission  are  ' 
to  be  "  deemed  conclusively  just  and  reasonable,"  it  is  because  they  have  been  made 
and  are  BO  upon  the  principle  presumed,  which  is  itself  the  logical  corollary  of  an 
otherwise  ironical  presumption. 

The  rule  of  decision  thus  clearly  embodied  in  the  constitution,  with  all  its  mani- 
fold implications,  is  before  and  after  railroads  and  railroad  commissioners.  For 
three  hundred  years,  in  the  absence  of  special  agreement  between  the  parties,  for 
services  rendered  or  to  be  rendered,  it  has  been  the  measure  of  compensation  and  of 
universal  application.  Grounded  in  common  sense,  as  a  familiar  principle  of  ele- 
mentary law,  it  is  the  "  perfection  of  reason,"  and  has  been  made  authoritative  by  a 
long  and  unbroken  series  of  adjudications. 


INTERS :ATE  COMMERCE.  89 

As  to  these  matters  the  commissioners  summarize  their  conclusions 
as  follows : 

(1)  It  is  a  constitutional  tribunal,  with  well  defined  official  functions,  to  be  exer- 
cised, subject  only  to  the  requirements  of  law,  with  becoming  independence  and  im- 
partiality in  the  interest  of  all  concerned. 

(2)  Its  judicial  power  to  hear  and  determine  complaints  presupposes  parties  of  rec- 
ord to  be  heard  and  specific  issues  between  them  to  be  determined,  and  is  to  be  exer- 
cised "  in  the  same  manner  and  to  the  same  extent  as  by  courts  of  record." 

(3)  Its  remedial  powers  and  duties  relate  exclusively  to  rates  of  charge  for  fares  and 
freights,  and  when  regularly  exercised  in  the  mode  prescribed,  its  decisions  are  prima 
facie  "just  and  reasonable." 

(4)  To  luake  them  in  fact  what  they  are  presumed  to  be,  they  must,  without  prefer- 
ence of  person  or  corporation,  be  based  upon  the  varying  conditions  of  the  service, 
and  be  a  reasonable  recompense  therefor. 

(5)  This  is  the  rule  of  compensation  for  Government  service  incorporated  in  the 
acts  of  Congress  to  aid  the  construction  of  the  Central  Pacific  and  other  overland 
roads,  and  estops  the  Government,  and  a  fortiori  all  other  parties,  from  discriminating 
against  them  in  payments  for  transportation  thereon. 

(6)  The  circumstantial  and  conditional  factors  of  transportation  are  the  admitted 
and  necessary  criterions  of  its  cost  and  value,  and  are  each  and  all  of  them  inconsist- 
ent with  any  theory  of  unconditional  uniform  rates  of  fare  and  freight. 

(7)  To  impose  such  rates  upon  the  Central  Pacific  Company  and  leased  lines  under 
its  management,  at  rentals  ranging  from  $100  to  $5,194  per  mile,  would  be  to  make 
some  of  them  bankrupt  pensioners  upon  others;  to  convert  relations  beneficial  to  all 
iuto  penalties  upon  such  as  have  the  least  to  gain  by  them ;  to  substitute  for  reason- 
able compensation  a  rule  of  rank  injustice,  subject  to  which  not  one  of  them  could 
have  been  constructed,  and  to  arrest  their  extension  to  districts  in  squalid  want  of 
them,  upon  the  mere  pretense  of  favoring  those  who  have  them. 

It  appears  from  the  report  that  the  commissioners,  after  investigation, 
finally  established  the  maximum  passenger  rates  on  the  Hues  owned  and 
operated  by  the  Central  Pacific  Eailroad  at  4  and  6  cents  a  mile.  Adopt- 
ing and  continuing  existing  rates  below  4  cents  a  mile,  this  schedule 
superseded  rates  ranging  up  to  10  cents  a  mile.  Ou  72 1  miles  of  the 
company's  system  the  rate  was  made  6  cents,  on  880  miles  4  cents,  on 
264  less  than  4  and  more  than  3  cents,  and  on  151  miles  less  than  3 
cents,  making,  it  is  said,  an  average  reduction  of  more  than  30  per 
cent.  The  companies  affected  submitted  to  the  enforcement  of  this 
schedule  under  protest.  They  excepted  to  the  jurisdiction  of  the  com- 
mission to  regulate  fares  and  freights  upon  the  Central  and  Southern 
Pacific  Railroads  on  the  ground  that  by  the  several  acts  of  Congress 
to  aid  the  construction  of  said  roads  all  power  to  regulate  their  charges, 
not  conferred  upon  their  directors,  was  reserved  by  the  General  Gov- 
ernment. It  was  urged  that  the  exercise  of  this  power  was  contingent 
upon  an  income  of  10  per  cent,  upon  the  cost  of  construction  of  the 
Central  Pacific,  exclusive  of  payments  upon  loans  due  the  Government, 
and  that  the  company  is  protected  by  the  acts  of  Congress  from  any 
State  law  by  which  it  might  be  delayed  or  prevented  from  performing 
its  obligations  to  the  General  Government. 

The  next  step  of  the  commissioners  was  to  reduce  non-competitive 
inland  freight  rates  on  the  same  company's  lines,  the  reductions  on 
cereals  and  in/ 11  stuffs  being,  it  is  stated,  in  some  cases  as  high  as  35 
per  cent.,  and  being  so  arranged  as  to  abolish  discriminations  against 
interior  points.  These  rates  were  also  submitted  to  under  protest  and 
duly  posted,  taking  effect  January  1,  1884. 


90  INTERSTATE    COMMERCE. 

In  their  report  for  tbe  year  ending  December  31,  1884,  the  commis- 
nioners  say : 

The  railroad  commission  of  this  State,  as  at  present  organized,  has  been  but  live 
years  in  existence,  and  is  comparatively  a  new  office.  Ir  has  not,  however,  been  ad- 
ministered altogether  by  new  men.  Its  first  administration,  fortunately  for  the  im- 
portant interests  in  its  safe  and  conservative  keeping,  is  generally  accredited  to  prior 
service  and  ripe  experience  in  an  analogous  position.  The  result  was,  at  the  end  of 
three  years,  three  reports  and  one  schedule  of  freights,  introduced,  and  pressed  to  its 
passage,  by  Commissioner  Cone.  This  administration,  in  two  years,  has  made  two 
reports  and  adopted  three  schedules,  reducing  and  establishing  rates  of  fare  and 
freight. 

In  reviewing  their  work  during  the  year  the  commissioners  show  that 
reductions  were  made  in  the  passenger  and  grain  rates  of  the  San 
Francisco  and  North  Pacific  Eailroad,  the  rates  fixed  on  staple  prod- 
ucts being  from  10  to  12  per  cent,  higher  than  similar  rates  on  the  Cen- 
tral Pacific  system,  and  that  steps  were  taken  towards  preparing  a 
general  schedule  of  freight  rates.  On  this  subject  they  say : 

The  wheat  crop  of  this  State  in  1883,  as  per  published  returns,  was  1,290,000  tons, 
of  which  less  than  one-half  was  brought  to  tide-water  by  the  Central  Pacific  system 
of  roads,  including  the  Southern  Pacific,  Northern  Division.  By  average  hauls  of 
less  than  84  miles,  the  longest  being  from  Nevada  and  Utah,  this  combination  of  roads 
brought  to  shipping  points  at  tide-water  546,467  tons,  for  which  the  gross  receipts 
were  §1,137,179.67,  which  is  just  §'2.08  per  ton.  That  this,  in  itself  considered,  and  by 
every  fair  comparison  with  anyroad  or  group  of  roads  west  of  the  Missouri  and  lower 
Mississippi  Rivers,  is  a  low  average  rate,  this  commission  has  cumulative  and  con- 
clusive proof.  Going  further  east,  it  has  found  that  up  to  points  of  transfer  to  rival 
rail  and  water  earners,  for  long  hauls  in  large  quantities,  on  small  but  profitable  mar- 
gins, to  the  Atlantic  sea-board,  the  tariffs  of  such  roads  as  the  Chicago  and  North- 
western, and  the  Chicago,  Milwaukee  and  Saint  Paul,  corroborate  the  statement. 
But  where  all  relation  and  proportion  of  tonnage,  distance,  and  other  conditions  of 
service  cease,  is  the  end  of  comparison.  And  while  the  great  trunk  lines,  with  their 
incomparable  volume  of  business  and  net  income,  by  an  inherent  law  of  trade,  rela- 
tively still  greater,  in  suppressed  rivalry  with  each  other,  and  in  irrepressible  com- 
petition with  lake,  river,  and  canal,  may  dictate  through  rates  from  sea  to  sea,  their 
interstate  tariffs  will  not  be  taken  by  this  commission  as  the  criterions  of  any  charge 
or  rate  of  charge  on  any  road  or  group  of  roads  in  this  State. 

Eeferring  to  the  opening  of  the  Southern  Pacific  Eailroad,  it  is  stated 
that  it  took  from  the  grain  crop  of  California  the  year  it  was  completed 
more  than  a  third  of  the  tax  levied  upon  it  by  ocean  carriers.  Prior 
to  the  year  ending  June  30,  1883,  the  cost  of  transportation  by  sea  had 
seldom,  if  ever,  gone  below  an  average  of  68s.  per  ton.  The  average 
for  the  year  ending  June  30, 1881,  was  68s.  lOrf.;  and  for  the  year  ending 
June  30,  1882,  was  69s.  3fd.,  which  was  the  ruling  rate  when  the  road 
was  completed  to  New  Orleans.  The  opening  of  this  new  competing 
route  to  Europe,  via  New  Orleans  or  Galvestou,  reduced  the  rate  by 
sailing  carriers  from  69s.  3%d.  to  43s.  4d.  And  the  commissioners  say  : 

The  cost  of  grain  shipments  aggregating  from  400,000  to  500,000  tons  per  annum, 
and  more  than  80  per  cent,  of  which  were  and  are  made  in  foreign  bottoms,  was  thus 
reduced  more  than  37  per  cent. 

In  speaking  of  the  Southern  Pacific  Eailroad  the  commissioners 
speak  very  plainly  their  views  as  to  the  proper  basis  of  railroad  charges 
as  follows : 

As  shown  by  the  accounts  of  the  company,  its  gross  receipts  for  the  last  ten  months 
are  about  $2,000,000  less  than  for  the  same  months  in  1883.  So  much  of  the  difference 


INTERSTATE    COMMERCE.  91 

as  is  not  the  result  of  reductions  of  passenger  fares  and  freight  rates,  made  not  on  in- 
come, but  as  expressly  required  by  the  constitution  and  statute,  on  the  "  charge"  and 
"rate  of  charge,"  it  must  be  referred  to  floods,  washouts,  and  fluctuations  in  business, 
beyond  human  foresight  or  control.  But  whether  accounted  for  by  one  or  all  of  these 
causes,  it  makes  sport  of  such  public  economists  as  would  limit  income  on  a  vagrant 
conjecture  and  balance  an  annual  account  of  loss  and  profit  before  the  books  have 
been  opened.  Such  feats  of  financiering  and  book-keeping  this  commission  has  not 
attempted.  It  has  never  undertaken  to  decide  how  rich  or  how  poor  it  is  lawful  to 
be,  but,  in  conformity  with  the  constitution  and  law,  has  always  held,  now  holds,  and 
will  continue  to  hold,  that  a  common  carrier,  the  same  as  a  hod-carrier,  "is  entitled 
to  reasonable  compensation  and  no  more."  (Civil  Code,  section  2173.)  This  is  short, 
sensible,  and  to  the  point.  It  is  the  only  rule  of  decision  possible  in  the  premises. 
And  even  without  the  sanction  of  the  legislature,  of  Congress,  of  the  courts,  of  the 
nations,  or  of  the  ages,  it  would  have  been  adopted  by  this  commission  upon  its  own 
motion  and  sense  of  justice. 

Armed  with  new  and  untried  powers,  and  charged  with  important  duties,  the  com- 
mission has  questioned  the  constitution  and  laws  for  the  reasons  which  inspired  them 
and  for  the  methods  to  be  followed.  Putting  aside  stump  statistics  and  exploded 
theories,  it  has  endeavored  to  exercise  its  control  over  the  business  and  management 
of  railroads  upon  their  own  prevailing  necessary  and  essential  principles.  Presum- 
ing no  wrong  in  individuals  or  corporations,  and  putting  the  onns  of  proof  upon  the 
accusing  party,  it  has  respected  and  applied  the  forms  and  principles  of  even-handed 
justice.  Holding  the  laws  made  by  and  for  the  people  to  be  the  measure  of  their 
rightful  demands  and  of  official  duty,  it  has  shared  no  trust  with  the  princes  of  fac- 
tion nor  with  the  spotless  primroses,  nicknamed  reformers.  Sitting  in  and  for  judg- 
ment in  the  very  vestibule  of  the  courts  that  are  to  enforce  or  reverse  its  orders  and 
decisions,  it  has  made  their  adjudications  the  lights  and  landmarks  of  its  own. 

On  the  other  hand,  the  minority  commissioner,  in  his  separate  report, 
states  that  the  changes  in  freight  rates  made  are  "utterly  insignifi- 
cant," and  that  no  material  reduction  was  really  made.  He  says: 

The  average  local  freight  rates  are  more  than  twice  as  high  upon  the  Central  Pacific 
and  other  lines  in  this  State,  upon  almost  every  article  produced  in  large  quantities, 
as  upon  those  that  are  transported  over  eastern  roads.  The  "  volume  of  traffic,"  an 
argument  often  used  by  railroad  authorities  here,  is  in  our  favor,  so  far  as  local  trans- 
portation is  concerned.  That  reductions  are  imperatively  demanded,  and  ought  to  be 
made  upon  such  articles  from  "  interior  points"  to  "  tide- water,"  or  "shipping  points," 
is  a  proposition  too  plain  to  admit  of  discussion. 

In  conclusion,  the  same  commissioner  pronounces  the  work  accom- 
plished by  the  commission  during  the  year  "  of  the  most  trifling  impor- 
tance." 

In  view  of  these  conflicting  statements,  the  committee  has  submitted 
the  liberal  extracts  given  from  the  reports  of  the  commissioners  to  il- 
lustrate the  situation  of  affairs  in  California,  but  has  not  been  enabled 
to  investigate  the  workings  of  the  system  now  actively  on  trial  in  that 
State  with  sufficient  thoroughness  to  warrant  a  conclusion  as  to  its 
results. 

COLORADO. 

The  constitution  of  Colorado,  adopted  in  1876,  declares  all  railroads 
public  highways  and  all  railroads  common  carriers.  Eailroads  are 
given  the  right  to  connect  at  the  State  line  with  roads  of  other  States, 
and  to  intersect,  connect  with,  or  cross  any  other  railroad.  Consolida- 
tion with  parallel  or  competing  lines  is  prohibited.  It  is  declared  that 
all  persons  shall  have  equal  rights  to  have  their  persons  and  property 


92  INTERSTATE    COMMERCE. 

transported  over  any  railroad;  that  no  undue  or  unreasonable  discrim 
iuation  shall  be  made  in  charges  or  in  facilities  for  the  transportation 
of  freight  or  passengers  within  the  State,  and  that  no  company,  nor  the 
lessee,  manager,  or  employe"  thereof,  shall  give  any  preference  to  indi- 
viduals, associations,  or  corporations  in  furnish  ing  cars  or  motive  power. 
It  is  also  declared  that  the  right  of  eminent  domain  shall  never  be 
abridged  nor  so  construed  as  to  prevent  the  general  assembly  from  tak- 
ing the  property  and  franchises  of  incorporated  companies  and  subject- 
ing them  to  public  use  the  same  as  the  property  of  individuals,  and  that 
the  police  power  of  the  State  shall  never  be  abridged  or  so  construed 
as  to  permit  corporations  to  conduct  their  business  in  such  a  manner  as 
to  infringe  the  equal  rights  of  individuals  or  the  general  well-being  of 
the  State.  The  fictitious  increase  of  stock  or  indebtedness  is  prohibited 
and  declared  void. 

An  act  passed  in  1881  requires  every  company  to  keep  at  the  princi- 
pal city  or  town  on  the  line  in  the  State  an  agent  authorized  to  adjust 
and  settle  all  claims  lor  overcharges  collected  within  the  State,  and  for 
all  loss  or  damage,  under  a  penalty  of  $3,000  for  each  month  during 
which  the  company  fails  to  keep  such  agent.  All  overcharges  and  all 
claims  for  loss  or  damage  must  be  paid  within  sixty  days  after  presenta- 
tion to  the  agent,  accompanied  by  the  expense  bill  and  statement  of  the 
amount  of  the  claim.  If  the  company  shall  fail  to  refund  the  amount 
of  the  overcharge,  loss,  or  damage  within  such  time,  the  claimant  may 
recover  $100  for  each  month  or  fraction  thereof  during  which  the  com- 
pany shall  be  in  default,  provided  that  he  recovers  iu  court  a  larger 
amount  than  the  sum  tendered  by  the  railroad  company. 

The  first  systematic  attempt  at  railroad  regulation  was  made  by  the 
passage  of  an  act  approved  April  6,  1885,  which  provided  for  the  ap- 
pointment of  a  railroad  commissioner  by  the  governor  for  the  term  of 
two  years.  It  is  made  the  duty  of  this  officer  to  investigate  any  neglect 
or  violation  of  the  laws  by  railroads  that  shall  come  to  his  knowledge, 
to  examine  and  inspect  their  condition  and  management,  and  to  notify 
the  corporations  of  any  changes  he  may  deem  necessary.  It  is  made 
the  duty  of  the  railroads  to  establish  loading  points  on  their  lines,  at 
finch  places  as  may  be  designated  by  the  commissioner,  for  the  loading 
of  live  stock,  ore,  coal,  coke,  stone,  lumber,  lime,  or  other  freight,  in 
car-load  lots,  and  they  are  required  to  furnish  cars  on  demand  at  their 
stations  and  such  loading  points.  The  section  prohibiting  unjust  dis- 
crimination provides  that — 

No  railroad  corporation  shall,  without  the  written  approval  of  said  commissioner, 
.charge,  demand,  or  receive  from  any  person,  company,  or  corporation,  for  the  trans- 
portation of  persons  or  property,  or  for  any  other  service,  a  greater  sum  than  it  shall 
while  operating  under  the  classification  and  schedule  then  in  force  charge,  demand, 
or  receive  from  any  other  person,  company,  or  corporation  for  a  like  service  from  the  I 
•same  place,  or  upon  like  conditions  and  under  similar  circumstances,  and  all  con- 
cessions of  rates,  drawbacks,  and  contracts  for  special  rates  shall  be  open  to  and 
.allowed  all  persons,  companies,  and  corporations  alike,  at  the  same  rate  per  ton 
per  mile,  upon  like  conditions  and  under  similar  circumstances,  except  in  special  cases 
designed  to  promote  the  development  of  the  resources  of  this  State,  when  the  approval 
of  the  commissioner  shall  be  obtained  in  writing.  But  nothing  in  this  section  shall 
be  construed  so  as  to  prevent  the  said  commissioner  from  making  a  lower  rate  per 
ton  per  mile,  in  car-load  lots,  than  shall  govern  shipments  in  less  quantities  than  car- 
load lots,  and  from  making  lower  rates  for  lots  of  not  less  than  five  car-loads  than  for 
single  car-load  lots,  except  in  cases  otherwise  provided  for  in  this  section. 


INTERSTATE    COMMERCE.  93 

The  nest  section  prohibits  unreasonable  charges,  and  requires  the 
railroads  to  keep  posted  up  in  their  passenger  depots  printed  copies  of 
the  classification  and  schedule  of  rates  of  freight  charges  in  force.  The 
companies  are  liable,  for  triple  damages,  with  costs  of  suit  and  attor- 
ney's fee,  to  persons  aggrieved  by  any  violation  of  the  provisions  which 
have  been  cited.  Annual  reports  are  required  to  be  made  in  the  man- 
ner and  form  prescribed  by  the  commissioner.  The  commissioner  may 
examine  witnesses  under  oath,  and  require  their  attendance  and  the 
production  of  books  and  papers.  On  his  request  it  is  the  duty  of  the 
governor  to  direct  the  proper  district  attorney  or  the  attorney-general 
to  institute  and  prosecute  suits  for  violations  of  the  law.  It  is  the  duty 
of  the  commissioner,  on  the  complaint  of  the  county  commissioners  or 
of  twenty-five  citizens  of  any  county,  to  examine  the  tariff  of  any  com- 
pany or  the  condition  or  operation  of  any  railroad  between  any  points 
stated  in  the  complaint,  and  to  report  to  the  petitioners  and  the  com- 
pany and  the  governor.  The  expenses  of  such  examination  are  to  be 
paid  by  the  county  or  the  citizens  when  the  prayer  of  the  petition  is 
denied,  otherwise  by  the  railroad  company.  The  railroads  are  required 
to  report  the  occurrence  of  all  serious  accidents  to  the  commissioner, 
who  may  investigate  the  same  and  report  as  to  the  causes  thereof  to  the 
governor. 

This  new  law  is  proving  satisfactory  in  the  regulation  of  the  local 
traffic  of  the  State,  but  it  cannot  be  made  fully  effective  until  Congress 
provides  some  method  for  the  regulation  of  interstate  traffic,  as  appears 
from  the  following  statement  made  to  the  committee  by  W.  B.  Felker, 
the  railroad  commissioner,  under  date  of  October  20: 

As  you  will  see  upon  examination  of  the  law,  oar  commission  is  advisory,  but 
(with  some  lew  additions)  of  sufficient  power  to  regulate  so  long  as  the  railroad  com- 
panies will  conform  to  the  recommendations  of  the  commissioner.  The  companies 
have  expressed  a  willingness  to  abide  by  the  law  and  the  recommendations  of  the 
commissioner,  and  in  every  instance  thus  far  have  done  so.  There  will  be  no  diffi- 
culty under  this  law  to  regulate  the  local  traffic  in  this  State,  but  the  great  trouble 
in  this  State  from  extortionate  or  discriminating  rates  arises  out  of  interstate  com- 
merce. 

The  policy  of  the  Missouri  River  roads  thus  far  has  been  disastrous  to  the  establish- 
ment in  this  State  of  manufacturing  industries.  Rates  on  raw  material,  in  many 
instances,  are  as  great  and  in  some  instances  greater  than  on  the  manufactured  articles* 
The  rate  upon  necessitous  shipments  from  Chicago  to  Denver  is  from  five  to  ten  times 
as  great  as  from  New  York  to  Chicago.  What  we  are  obliged  to  get  from  beyond 
the  Missouri  River  must  pay  its  value  in  freight  charges.  There  is  no  competition  ; 
rates  are  pooled  and  the  shipper  or  consignee  must  pay. 

The  people  of  this  State  have  been  and  it-ill  continue  to  be  at  the  mercy  of  railway 
companies  until  Congres*  furnishes  relief.  Congressional  legislation  must  come  sooner 
or  later ;  I  trust  it  will  be  the  fruit  of  the  labor  of  your  honorable  committee. 

CONNECTICUT. 

Of  the  existing  State  railroad  commissions  that  of  Connecticut  is  one 
of  the  oldest,  having  been  established  in  1853.  The  character  of  the 
legislation  of  the  State  and  the  general  scope  of  the  powers  and  duties 
of  the  commissioners  are  clearly  stated  in  the  folio wiug  paragraph  from 
their  report  to  the  legislature  for  the  year  1884: 

The  law  requires  us  to  make  a  report  to  you  of  the  general  conduct  and  condition 
of  all  the  railroads  in  the  State,  with  such  suggestions  for  legislation  as  we  deem 
proper.  Obviously  this  report  is  to  be  of  the  cor  duct,  or  management,  of  the  rail 


94  INTERSTATE    COMMERCE. 

roads,  in  those  particulars  which  are  by  law  intrusted  to  our  supervision,  and  the  sug- 
gestions for  legislation  are  to  be  in  the  same  direction.  The  legislature  has  never 
thought  proper  to  confer  upon  us  any  duties  in  regard  to  the  financial  management 
of  the  companies,  our  authority  in  that  direction  being  confined  to  seeing  that  their 
receipts  and  expenditures,  and  their  financial  condition,,  are  reported  to  us  in  the  pre- 
scribed manner,  and,  so  far  as  appears,  correctly.  The  duties  of  the  railroad  commis- 
sioners in  the  several  States  are  as  varied  as  the  exigencies  which  called  them  into 
being.  Jn  some  States  their  chief  duties  pertain  to  questions  of  rates  and  tariffs,  in 
the  fixing  of  which  they  have  been  given  almost  absolute  power.  In  our  own  State 
the  plunging  of  a  passenger  train  into  an  open  draw  led  the  legislature  to  provide  for 
a  board  of  commissioners,  whose  duty  should  be,  at  their  discretion,  or  on  proper  com- 
plaint, to  inspect  the  railroads,  "their  rails,  switches,  road  crossings,  buildings,  sta- 
tions, works,  bridges,  and  engines  and  cars,"  "  and  make  any  and  all  other  inquiries 
needful  to  determine  whether  the  affairs  of  such  corporations  are  managed  conform- 
ably to  law  and  with  public  safety  and  convenience,"  and  to  "  advise  and  recommend 
the  making  of  such  repairs"  "as  they  shall  deem  necessary  to  the  public  safety  and 
to  the  safety  of  the  operatives  on  said  roads,"  and  some  other  like  matters.  Also  to 
"call  for  accurate  and  full  returns  and  statistics  from  each  railroad  corporation,"  in 
accordance  with  the  prescribed  form.  Though  the  powers  and  the  duties  of  the  com- 
missioners have  been  very  much  enlarged  since  that  time,  yet  this  enlargement  has 
always  been  confined  to  matters  pertaining  to  the  safety  and  convenience  of  the  pub- 
lic and  the  employ6s  of  the  companies,  and  never  has  been  so  extended  as  to  give  us 
any  control  over  matters  of  transportation,  or  any  authority  in  the  regulation  of  rates 
and  tariffs.  Our  own  duties  being  then  so  clearly  apart  from  all  questions  of  trans- 
portation, we  have  thought  that  to  recommend  or  advise  the  general  assembly  as  to 
any  matter  of  this  kind  would  be  to  arrogate  to  ourselves  duties  which  you  have  never 
intrusted  to  us. 

For  this  reason  we  have  not  heretofore  made,  nor  does  it  seem  to  us  that  it  would 
be  proper  for  us  to  make,  any  recommendations  in  regard  to  the  enactment  of  a  law 
of  the  character  of  that  which  has  heen  under  consideration  the  last  two  sessions  of 
the  general  assembly,  known  as  the  "shoit-haul"  bill,  providing  that  no  railroad 
company  should  receive  for  transportation  of  freight  to  any  station  on  its  road  a 
greater  sum  than  is  at  th^  time  charged  or  received  for  the  transportation  of  the  like 
class  and  quantity  of  freight  from  the  same  original  point  of  departure  to  a  station  at 
a  greater  distance  on  said  railroad  in  the  same  direction. 

The  commission  consists  of  three  members,  one  being  appointed  an- 
nually by  the  governor  for  a  term  of  three  years.  Their  salaries  and  office 
expenses  are  paid  by  the  State,  but  assessed  upon  the  railroads  accord- 
ing to  their  mileage.  They  are  required  to  exercise  a  close  supervision 
over  all  matters  connected  with  the  construction  and  practical  opera- 
tion of  the  roads.  A  road  cannot  be  constructed  until  the  location  has 
been  approved  by  the  commissioners,  nor  can  it  be  opened  for  public 
travel  until  they  have  given  a  certificate  that  it  is  in  a  suitable  and  safe 
condition. 

The  "short-haul  laww  referred  to  by  the  commissioners  was  passed 
at  the  last  session  of  the  legislature  and  approved  April  16,  1885.  It 
provides  that — 

No  railroad  corporation  shall  charge  or  receive  for  the  transportation  of  freight  to 
any  station  on  its  road  a  greater  sum  than  is  at  the  time  ctarged  or  received  for  the 
transportation  of  the  like  kind  and  quantity  of  freight  frorr  the  same  original  point 
of  departure  and  under  similar  circumstances  to  a  station  at  a  greater  distance  on  its 
road  in  the  same  direction. 

A  similar  provision  is  made  as  to  the  rates  charged  by  connecting 
roads  on  freight  transported  to  any  station  on  the  line  of  either  road, 


INTERSTATE    COMMERCE.  95 

and  the  law  is  made  to  include  ail  terminal  charges.  In  addition  to 
damages  a  penalty  of  $200  for  each  offense  may  be  recovered  by  any 
person  aggrieved. 

DAKOTA. 

The  Territory  of  Dakota  has  a  general  railroad  incorporation  law,  en- 
acted in  1879,  similar  in  its  provisions  to  those  of  the  States.  An  act 
passed  in  1883  provides  that  in  cases  of  consolidation  the  capital  stock 
issued  shall  not  exceed  that  of  the  consolidated  companies,  and  that  no 
other  evidences  of  debt  shall  be  issued  in  connection  with  such  consoli- 
dation. An  act  approved  March  G,  1885,  established  a  board  of  rail- 
road commissioners,  and  provided  for  regulating  the  transportation  of 
freight  on  railroads  in  the  Territory.  In  accordance  with  its  provisions 
commissioners  have  been  appointed  and  entered  upon  the  discharge  of 
their  duties. 

This  act  provides  for  the  appointment  by  the  governor  of  three  com- 
missioners, to  serve  two  years,  who  are  given  "general  supervision"  of 
all  railroads,  sleeping-car  companies,  express  companies,  and  telegraph 
companies  in  the  Territory,  and  are  to  inquire  into  any  neglect  or  viola- 
tion of  the  laws  by  railroads.  Whenever,  in  their  judgment,  any  com- 
pany fails  to  comply  with  the  laws,  or  repair?  or  improvements  are 
necessary,  or  changes  in  its  rates  or  manner  of  conducting  its  business, 
they  are  to  notify  the  company  and  report  the  proceedings  to  the  leg- 
islature. Annual  reports  are  required  of  the  railroads.  The  com- 
missioners are  given  power  to  examine  the  books  and  records  of  the 
corporations,  and  to  examine  witnesses  under  oath,  and  enforce  their 
attendance  in  the  same  manner  as  the  courts. 

The  willful  obstruction  of  the  commissioners  in  the  performance  of 
their  duties  and  the  refusal  to  give  information  is  made  a  misdemeanor, 
punishable  by  a  fine  not  exceeding  $1,000.  It  is  provided  that  "no 
railroad  company  shall  charge  or  receive  from  any  persons  a  higher 
rate  per  ton  per  mile  for  one  car-load  of  freight  than  for  a  greater  num- 
ber of  car  loads  per  car."  The  roads  are  required  to  receive  and  trans- 
port within  a  reasonable  time  grain  offered  for  shipment  and  to  permit 
the  same  to  be  loaded  on  track  or  at  any  warehouse  without  discrimi- 
nation. The  act  prohibits  discrimination  in  charges  "for  a  like  service 
from  tbe  same  place  and  upon  like  conditions,"  and  requires  that  all 
concessions,  rebates,  and  special  rates  shall  be  open  to  all,  and  that  no 
more  shall  be  charged  by  a  railroad  from  any  point  on  its  line  than  a 
fair  and  just  proportion  of  the  price  charged  for  the  same  kind  of  freight 
transported  from  any  other  point  of  equal  distance  within  the  Territory. 
Triple  damages,  with  costs  of  suit  and  attorney's  fee,  are  allowed  for 
extortion  or  unjust  discrimination.  It  is  made  tbe  duty  of  the  commis 
sioners  to  enforce  the  provisions  of  the  act  in  the  courts,  and  of  the 
district  attorney  to  prosecute  on  their  complaint. 

Another  enactment regulates  the  transportation  of  fuel  on  the  railroads 
of  theTerritory.  This  requires  the  roads  to  receive  and  transport  in  bulk 
within  a  reasonable  time  coal  or  other  fuel  offered  by  any  shipper  without 
discrimination  or  favor  between  shippers,  and  prohibits  any  discrim- 
ination in  the  charges  made  for  transporting  fuel.  It  is  made  the  duty 
of  the  commissioners  to  enforce  the  act. 

The  committee  has  received  from  the  railroad  commissioners  of  Da- 
kota, Messrs.  William  M.  Evans,  W.  H.  McVay,  and  Alexander  Griggs, 
in  response  to  its  request,  the  lollowiug  "statement  of  the  situation  of  af- 


96  INTERSTATE    COMMERCE. 

fairs  in  Dakota  as  between  the  transportation  interests  and  the  people," 
dated  at  Fargo,  October  31,  1885  : 

"  It  will  be  seen  from  the  features  of  the  railroad  laws  of  the  Terri- 
tory that  the  early  laws  of  the  Territory  seem  to  have  been  made  so  as 
to  induce  the  building  of  railroads,  and,  in  accordance  with  the  plans 
of  able  railroad  counselors  and  attorneys,  with  a  view  to  give  their  clients 
the  greatest  available  privileges  and  the  least  possible  hindrances  in 
building  and  operating  the  roads.  Our  legislative  assembly  seems  to 
have  taken  no  advantage  of  the  experience  acquired  in  the  older  States 
which  had  endeavored  to  protect  the  people  to  some  extent  by  safe- 
guards and  restrictions,  for  in  this  Territory  many  of  the  common  safe- 
guards against  corporate  encroachments  were  so  modified  or  annulled 
as  to  leave  but  few  restrictions  upon  the  roads  and  their  management. 

"  The  people  in  their  eagerness  to  secure  railroads  seem  to  have  been 
indifferent  as  to  the  terms  upon  which  such  transportation  might  be 
obtained.  This  is  not,  however,  so  much  a  source  of  wonder,  when  it  is 
remembered  that  nearly  every  mile  of  road  in  Dakota  was  constructed 
in  advance  of  the  settlement  of  the  country,  and  the  few  settlers  along 
the  lines  were  glad  to  secure  communication  with  the  markets  of  the 
East  on  almost  any  terms. 

"  When  it  was  observed  that  a  railroad  might  make  or  destroy  a 
town  ;  that  the  value  of  land  and  its  products  were  largely  determined 
by  the  policy  of  a  railroad  company  ;  that  even  the  ordinary  laws  of 
trade  and  commerce  were  divided  and  subverted  by  the  action  of  such 
companies,  in  train  service,  tariff,  &c. ;  fhat  large  districts  of  the  Ter- 
ritory were  apparently  parceled  out  between  the  companies  as  if  owned 
in  fee,  and  occupied  or  left  with  no  transportation  facilities,  in  ttie  most 
arbitrary  manner,  and  that  where  transportation  ought  to  have  been 
untrammeled  the  producers  were,  in  some  instances  at  least,  refused 
the  privilege  of  shipping  their  own  grain  on  their  own  account,  and 
virtually  compelled  to  ship  it  through  dealers,  the  people  became  jealous 
of  these  enormous  powers. 

"  By  the  laws  enacted  there  was  no  legal  way  to  direct  or  regulate 
or  control,  m  any  practical  manner,  the  management  of  the  companies. 
The  charges  for  service  frequently  seemed  to  be  governed  by  no  prin- 
ciples of  equity  or  justice.  Damages  to  life  and  property  were  liquidated 
reluctantly  and  often  refused.  These  things  and  many  more  that  might 
be  mentioned  created  in  the  minds  of  the  people  a  feeling  of  distrust 
and  in  many  cases  downright  hostility  toward  railroad  corporations. 

"One  prolific  cause  of  complaint  has  been  the  high  tariff  on  freights, 
and  they  are  excessive  in  comparison  with  rates  on  Eastern  roads  where 
the  cost  of  building  is  much  greater  than  here.  The  mass  of  the  people 
do  not  understand  why  a  bushel  of  wheat  or  a  pound  of  merchandise  can- 
not be  as  cheaply  transported  ill  Dakota  as,  for  instance,  in  Isew  York. 
The  long  cold  winters  entail  extraordinary  expenses  in  the  way  of  fuel, 
snow-plows,  section  bands,  &c.,  the  freight  alone  on  coal  for  locomo- 
tives to  a  road  in  Dakota  exceeding  that  of  the  total  cost  to  some  of  the 
Eastern  lines. 

"Again,  the  tonnage  per  mile  on  the  Dakota  roads  is  probably  less  than 
one  fourth  of  that  on  roads  in  the  Eastern  States.  And  necessarily, 
therefore,  freights  must  be  much  higher,  but  after  all  it  would  seem  that 
the  difference  is  still  too  great.  It  may  be  that  the  rate  on  the  Eastern 
li,nes  is  too  low,  and  that  ours  is  only  relatively  too  high.  We  do  not 
care  to  discuss  this  question,  but  only  present  facts  as  they  exist. 

"Then  these  charges  vary  from  time  to  time,  bearing,  apparently,  no 
relation  to  the  cost  of  service.  This  seemingly  unjust  discrimination 


INTERSTATE    COMMERCE.  97 

and  the  forced  shipment  of  grain  through  the  hands  of  dealers  were  the 
chief  causes  of  the  attempts  which  have  been  made  to  remedy  the  diffi- 
culties. The  grain  and  commission  law  of  1883  is  an  example. 

"But  the  plea  that  the  companies  have  vested  rights  and  privileges 
under  laws  previously  passed  has  been  a  bar  to  successful  legislation. 
The  present  railroad  commission  law  is  another  attempt  which  is  now 
being  tried.  The  law  gives  to  three  commissioners  various  powers,  viz, 
to  exact  compliance  with  the  present  laws,  to  prosecute  for  unjust  dis- 
criminations, and  to  collect  information  concerning  railroads.  The 
present  laws  pertain  chiefly  to  the  safety  and  convenience  of  the  public, 
but  do  not  attempt  to  control  the  management  of  railroads  as  to  the 
kind  of  service  that  shall  be  rendered  and  other  details,  nor  do  they 
attempt  to  regulate  the  tariff  rates  for  passengers  or  freight,  which  are 
the  principal  causes  of  complaint. 

"The  railroad  commission  law  has  been  very  useful  in  that  it  has  in 
a  marked  degree  induced  railroad  companies  to  be  more  careful,  con- 
siderate, and  attentive  to  the  wants  of  the  people.  The  commissioners 
have  been  practically  a  board  of  arbitration,  and  in  this  capacity  have 
been  very  beneficial  and  are  doing  a  vast  amount  of  labor.  It  would  be 
impossible,  in  a  communication  of  this  nature,  to  enter  into  details  of 
what  they  have  done.  I  will  therefore  only  say  that  they  have  secured 
from  the  railroad  corporations  doing 'business  in  Dakota  very  many 
additional  facilities  to  shippers  and  patrons  of  the  roads  in  the  way  of 
grounds  for  private  elevators  and  warehouses,  railroad  crossings,  side 
tracks,  &c.,  to  say  nothing  of  many  miles  of  new  steel  rails  laid  at  the 
request  of  the  board  to  replace  worn  iron.  Rarely  have  the  roads  failed 
or  refused  to  comply  with  the  recommendations  of  the  board. 

"Additional  legislation  is  necessary  to  secure  the  best  results.  In 
regard  to  national  legislation  we  are  of  the  opinion  that  a  national  rail- 
road commission,  with  the  powers  usually  given  to  State  commissioners, 
together  with  general  jurisdiction  over  the  subject  of  interstate  com- 
merce, would  be  useful.  (Provision  might  be  made  to  give  the  chair- 
man of  State  cominissiouers  a  voice  in  the  national  board.)  By  this  we 
mean  general  supervisory  powers  to  examine  all  alleged  violations  of 
law  and  arbitrate  the  same  where  possible. 

"  This  presupposes  Congressional  action,  and  we  submit  that  it  will 
require  the  wisdom  of  the  best  minds  in  the  Xational  Congress  to 
frame  a  statute  that  shall  solve  the  complex  problem  of  a  proper  regu- 
lation of  interstate  commerce.  We  do  not  believe  in  the  policy  of  at- 
tempting to  fix  rates  by  any  commission  appointed  for  that  purpose. 
It  would  seem  sufficient  to  vest  such  board  with  advisory  powers  sim- 
ply, in  this  respect,  and,  further,  giving  the  board  power  to  investigate 
all  cases  of  alleged  extortion  or  unjust  discrimination  on  the  part  of 
railroad  corporations,  reporting  their  finding  to  the  United  States  at- 
torney, then  leaving  it  to  the  courts  to  determine  in  each  case  the 
question  of  fact  and  the  punishment.  Probably  the  legislatures  of 
Dakota  and  Iowa  have  gone  far  enough  in  this  direction.  In  all  cases 
where  the  complaint  involved  a  charge  on  freight  carried  from  one 
State  into  another  the  United  States  courts  would  seem,  the  proper 
tribunal  before  which  such  cases  should  be  heard." 

DELAWARE. 

Delaware  has  not  enacted  any  restrictive  legislation  for  the  regulation 
of  railroads.     The  only  action  in  relation  to  railroads  taken  by  the  leg- 
islature of  that  State  in  recent  years  (except  the  passage  of  special  acts 
S.  Kep.  46 7 


98  INTERSTATE    COMMERCE. 

of  incorporation,  &c.)  has  been  the  adoption  at  the  sessions  of  1875, 
1877,  1879, 1883,  and  1885,  of  joint  resolutions  thanking  me  railroads  of 
the  State  for  favoring  the  members  with  passes. 

The  legislature  of  1881  adopted  a  joint  resolution  favoring  the  estab- 
lishment of  a  board  of  commissioners  of  interstate  commerce  by  Con- 
gress. 

FLORIDA. 

There  has  been  considerable  legislation  in  Florida  in  relation  to  in- 
ternal improvement  companies,  but  tliis  has  mainly  affected  canals.  In 
1873  the  legislature  repealed  all  acts  authorizing  the  issue  of  bonds  by 
the  State  to  railroads.  In  1874  a  general  act  for  the  incorporation  of 
railroad  and  canal  companies  was  adopted,  by  which  they  were  author- 
ized to  regulate  the  time  and  manner  in  which  passengers  and  property 
should  be  transported  and  the  compensation  to  be  paid  therefor.  In 
1879  an  act  was  passed  which  limited  passenger  fares  on  the  railroads 
of  the  State  to  3  cents  per  mile.  This  was  repealed  in  1881.  and  the 
maximum  rate  fixed  at  5  cents  per  mile.  Beyond  this  there  has  been 
no  attempt  to  regulate  the  management  of  railroads  in  that  State. 

IDAHO  TERRITORY. 

* 

To  encourage  the  construction  of  railroads  in  Idaho  the  Territorial 
legislature  in  1873  exempted  from  taxation  until  1880  all  railroads  con- 
structed in  that  Territory,  providing,  however,  that  they  should  not 
charge  higher  rates  in  Idaho  than  were  charged  for  the  same  service 
by  the  Central  and  Union  Pacific  Railroads  on  their  lines.  Since  that 
time  there  has  been  no  legislation  in  that  Territory  in  relation  to  rail- 
roads. 

INDIANA. 

The  State  of  Indiana  is  practically  without  any  legislation  for  the  reg- 
ulation of  railroads.  An  act  passed  in  1867  prohibits  railroads  from 
increasing  or  advancing  their  rates  of  freight  or  charging/for  the  trans- 
portation thereof  a  sum  greater  than  the  rate  asked  or  charged  at  the 
tilne  such  freight  is  offered  for  transportation.  (Kev.  Stat.  1881,  sec. 
4038.)  Another  enactment  makes  a  railroad  refusing  to  take  and  trans- 
port freight  or  to  deliver  the  same  at  the  regularly  appointed  place  liable 
for  all  damages  and  the  costs  of  suit.  (Kev.  Stat.  1881,  sec.  3920.) 

IOWA. 

The  subject  of  railroad  regulation  has  received  a  great  deal  of  atten- 
tion in  Iowa,  and  the  experience  of  that  State  is  of  especial  interest  in 
view  of  the  fact  that,  after  a  fair  trial  of  a  well-devised  system  of  regu- 
lating rates  by  specific  legislation,  the  people  have  adopted  the  system 
of  regulation  through  an  advisory  commission.  The  committee  was  for- 
tunate in  receiving  from  Judge  McDill,  of  the  Iowa  commission,  the 
following  very  concise  re"snm6  of  the  railroad  history  and  legislation  of 
the  State  (Testimony,  p.  943) : 

R^SUMri  OF  RAILROAD  HISTORY. 

; 

From  the  year  A.  D.  1853  to  the  breaking  out  of  the  war  was  the  planning  and 
building  period  for  railroads  in  Iowa.  All  legislation  was  for  the  encouragement  of 
railroad  building,  and  Nthe  matter  of  railroad  control  does  not  seern  to  have  been 


INTERSTATE    COMMERCE.  99 

thought  of  or  discussed.  One  who  studies  the  legislation  of  that  period  cannot  fail  to 
note  an  anxiety  to  encourage  investments  in  railroad  property.  A  new  and  growing 
community  was  earnestly  struggling  for  railroad  facilities  and  keenly  appreciated 
their  necessity  for  the  development  and  growth  of  the  State.  During  the  war  little 
or  no  progress  was  made  in  railroad  building.  At  its  close  the  activity  and  progress 
were  almost  magical  in  character.  Very  soon  lines  were  completed,  systems  arranged, 
and  almost  as  soon  there  began  to  be  uneasiness  and  dissatisfaction  manifested  as  to 
railroad  management.  The  country  was  new  and  the  situation  poorly  understood 
both  by  railroad  officials  and  the  public.  In  railroad  circles  the  old  idea  of  vested 
rights  under  the  charters  and  grants  was  the  controlling  idea.  They  were  accustomed 
to  look  upon  the  railroad  from  a  purely  proprietary  standpoint.  The  property,  it  was 
claimed,  belonged  to  the  stockholders,  and  the  public  had  nothing  to  do  but  to  pay 
the  rates  established  and  take  the  accommodations  furnished,  as  the  sole  considera- 
tion should  be  profit  to  the  owners.  From  year  to  year  the  situation  grew  worse  and 
worse.  Abundant  crops,  extraordinarily  low  prices  for  products,  a  disturbed  condi- 
tion of  mind  upon  currency  and  financial  questions  generally  all  served  to  intensify 
the  dissatisfaction,  and  angry  agitation  was  the  order  of  the  day.  The  loud»st  talker 
and  the  wildest  declaimer  led  the  people,  and  there  was  in  appearance  nothing  but 
clash  and  conflict  to  be  expected  in  railroad  matters. 

THE   GRANGEU   LAW. 

Legislation  was  had  iu  1874,  resulting  in  the  passage  of  what  was  known  and  is 
yet  known  as  the  "granger  law."  This  act,  the  result  of  a  conflict  of  the  char- 
acter above  faintly  outlined,  was  not  by  any  means  so  unwise  an  act  as  might  have 
been  anticipated  from  the  nature  of  the  preliminary  contests  and  the  irritating 
circumstances  which  surrounded  them.  The  theory  of  the  law  was  a  limitation  of 
maximum  charges  for  transportation  of  passengers  and  freight.  The  several  rail- 
roads were  classified  according  to  the  gross  amount  of  their  respective  earnings 
within  the  State  per  mile,  as  follows:  Class  A  included  those  earning  $4,000  per 
mile  or  more ;  Class  B,  those  earning  $3,000  per  mile  and  less  than  $4,000;  Class  C, 
1  hosti  earning  less  than  $3,000  per  mile. 

Passenger  rates,  with  ordinary  baggage,  were  fixed  for  Class  A  at  3  cents  per  mile, 
Class  B  3£  cents  per  mile,  Class  C  at  4  cents  per  mile.  A  fixed-distance  tariff  rate 
was  then  enacted  for  one  mile  and  each  additional  mile  up  to  a  distance  of  362 
miles  upon  first,  second,  third,  and  fourth-class  merchandise  per  hundred  pounds, 
upon  Hour  and  meal  per  barrel  in  car-load,  upon  salt,  cement,  plaster  and  stucco  per 
barrel  in  twouty-fivo-barrel  lots,  upon  all  grain,  except  wheat  and  mill-stuffs  per 
hundred  pounds  in  car-loads,  upon  wheat  per  hundred  pounds  in  car-loads,  upon 
lumber  in  car-loads,  horses  and  mules  per  car-load,  cattle  and  hogs  per  car-load, 
sheep  per  car-load,  classes  A,  B,  and  C  in  merchandise  per  car-load,  and  coal  per  ton 
per  car-load.  Railroads  in  Class  A  could  charge  90  per  cent,  of  the  rate  fixed  ;  in 
Class  B  105  per  cent,  and  Class  C  120  per  cent.,  and  it  was  declared  unlawful  to  charge 
more. 

A  careful  classification  of  goods  and  articles  to  be  transported  was  then  enacted. 
Each  company  was  required  to  prepare  and  keep  posted  in  each  of  its  freight  and 
passenger  offices  a  true  copy  of  the  classification  and  its  rates  under  the  law.  An  an- 
nual statement  of  receipts  was  required  from  each  company  January  1, 1875,  and  each 
January  thereafter.  Penalties  for  violation  of  the  act  were  prescribed.  If  twenty 
tax-payers  notified  the  governor  of  a  violation  of  the  law,  he  was  to  employ  suit- 
able counsel  and  prosecute  the  delinquent  company.  Money  was  appropriated  to 
conduct  the  prosecutions.  All  connecting  roads  for  the  purpose  of  fixing  rates  were 
to  be  regarded  as  one  road.  Like  charges  were  required  to  be  made  under  similar 
conditions.  All  concessions  of  rates,  drawbacks  ami  contracts  for  special  rales, 
founded  upon  the  demands  of  commerce  and  transportation,  were  to  be  open  to  all 


100  INTERSTATE    COMMERCE. 

persons  alike  from  the  same  place  and  upon  like  conditions.  Each  officer,  agent,  or 
employe"  of  the  companies  who  violated  the  provisions  of  the  act  was  declared  guilty 
of  a  misdemeanor,  and  subjected  to  fine  and  imprisonment,  and  any  corporation  au- 
thorizing, directing,  causing,  or  permitting  any  violation  of  the  law  by  its  servants 
forfeited  to  the  person  injured  five  times  the  amount,  compensation,  or  charge  ille- 
gally taken,  with  attorney's  fee  to  be  taxed  as  costs.  Thus  was  provided  rates  fixed 
by  law,  classification  fixed  bylaw,  penalties  and  punishments,  together  with  punitive 
damages.  With  one  or  two  exceptions  the  companies  endeavored  .to  obey  the  law 
but  the  feeling  was  intense. 

Similar  laws  had  been  passed  in  other  Northwestern  States,  and,  claiming  that  the 
law  was  unconstitutional,  the  companies  took  measures  to  test  its  validity,  which 
ended  in  what  are  known  as  the  "  granger  cases,"  which  seem  to  have  established  the 
doctrine  that  the  States  may,  without  violation  of  any  right,  regulate  domestic  as 
distinguished  from  interstate  commerce,  and  in  so  doing  may  fix  maximum  rates. 
The  practical  effects  of  the  law  were  eagerly  observed,  and  prophets  were  not  wanting 
to  encourage  the  contending  disputant*.  Time,  however,  told  its  own  story.  Some 
industries  were  benefited  by  the  law,  others  were  injured.  Some  localities  were 
helped,  others  were  hurt.  In  general  terms,  it  may  be  said  that  the  eastern  part  of 
the  State  was  benefited,  while  the  central  and  western  parts  were  crippled  by  the 
operation  of  the  distance  tariff.  The  general  arrangement  of  distance  charges  may 
be  gathered  from  the  following  statement :  One  hundred  pounds  of  first-class  merchan- 
dise paid  for  1  mile,  12  cents ;  for  362  miles,  73£  cents.  In  the  course  of  four  years 
the  change  of  sentiment  in  reference  to  the  law  was  such  as  to  bring  about  a  repeal 
thereof  and  the  enactment  of  the  present,  known  as  the  commissioner  law.  All  parties 
seemed  to  unite  upon  the  necessity  of  regulation ;  they  only  differed  as  to  the  manner. 
The  prevalent  belief  was  that  the  law  «f  1874  was  not  sufficiently  elastic  and  was  un- 
equal and  unjust  in  its  operation. 

THE   COMMISSIONER  LAW, 

The  law  of  1878,  known  as  the  commissioner  law,  repeals  all  portions  of  the  act  of 
1874,  known  aa  the  granger  law,  except  that  portion  which  provides  for  the  classifi- 
cation of  railroads  according  to  earnings  per  mile,  fixes  rates  for  passenger  fare,  and 
requires  an  annual  report  of  gross  earnings.  It  requires  the  governor  to  appoint  three 
persons,  one  of  whom  shall  be  a  civil  engineer,  who  shall  constitute  a  board  of  rail- 
road commissioners,  and  they  are  to  appoint  a  secretary.  They  are  to  have  general 
supervision  of  all  railroads  in  the  State  operated  by  steam,  so  far  as  the  public  safety 
and  convenience  are  concerned.  To  ihis  end  they  are  to  inquire  into  any  violation  of 
the  laws  by  railroad  companies  or  their  employe's,  to  inform  themselves  of  the  condi- 
tion of  the  lines,  their  equipment,  and  the  manner-of  their  conduct  and  management. 
If  a  bridge  is  deemed  unsafe,  they  may  require  it  to  be  made  safe,  and  if  their  order  is 
not  obeyed  within  ten  days  they  may  stop  and  prevent  the  passage  of  trains  over  the 
bridge  while  unsafe.  They  may  call  the  attention  of  the  companies  to  any  violation 
of  the  law  or  of  their  charter  obligations,  to  necessary  repairs  to  the  road,  to  neces- 
sary additions  to  the  rolling  stock,  to  necessary  additions  to  or  changes  of  stations  or 
station-houses,  to  changes  in  rates  of  fare  for  transporting  freight  or  passengers,  or  to 
any  change  in  the  method  of  operating  the  roads  or  conducting  their  business,  which 
in  the  judgment  of  the  commissioners  is  reasonable  and  expedient  in  order  to  promote 
the  security,  convenience,  and  accommodation  of  the  public. 

Such  recommendations  are  to  be  in  writing,  and  regularly  served  upon  any  station 
agent,  clerk,  treasurer,  or  director  of  the  company ;  and,  if  disregarded,  that  fact  is  to 
be  reported  in  their  annual  report  to  the  legislature.  Reports  are  required  from  the 
companies  to  the  commissioners  showing  capital  stock,  preferred  stock,  funded  debt, 
and  rate  of  interest,  floating  debt,  cost,  and  present  cash  value  of  road,  value  of  other 
property,  acres  of  land  granted,  acres  of  land  unsold,  list  of  officers  and  directors,  av- 


INTERSTATE    COMMERCE.  101 

erage  amount  of  tonnage  that  can  be  carried  over  the  road  with  an  engine  of  given 
power,  and  such  other  facts  as  the  commissioner  may  deem  important. 

The  commissioners  are  empowered  to  examine  the  books  of  the  company,  subpoena 
witnesses  and  examine  them  under  oath.  Railroad  companies  are  required  to  furnish 
suitable  cars  for  the  transportation  of  freight  to  all  persons  applying,  to  transport  the 
Kami-  with  reasonable  dispatch,  to  provide  and  keep  suitable  facilities  for  handling 
and  forwarding  freight,  to  receive  empty  or  loaded  cars  of  any  connecting  road,  and 
to  return  the  same,  and  to  charge  no  more  for  doing  so  than  other  connecting  roads 
are  charged ;  to  charge,  demand,  or  receive  no  greater  snm  from  any  person,  com- 
pany, or  corporation  than  is  charged  others  for  a  like  service  from  the  same  place,  or 
upon  like  condition  and  under  similar  circumstances.  All  concessions  of  rates,  draw- 
backs and  contracts  for  special  rates  are  to  be  opened  to  and  allowed  all  alike  at  the 
same  rate  per  ton  per  mile  by  the  car-load  upon  like  conditions  and  under  similar 
circumstances,  unless  by  reason  of  the  extra  cost  of  transportation  from  a  different 
point  the  same  would  be  unreasonable  and  inequitable,  and  shall  charge' no  more  for 
transporting  freight  from  any  point  than  a  fair  and  just  proportion  of  the  price 
charged  for  the  same  kind  of  freight  transported  from  any  other  point.  Unreasonable 
charges  for  hauling,  handling,  or  storing  freight,  or  for  any  other  service,  are  pro- 
hibited. Extortion  and  unjust  discrimination  are  prohibited,  and  treble  damages  and 
attorney's  fees  given  to  any  person  so  injured.  Serious  accidents,  resulting  in  loss  of 
life  or  personal  injury,  are  to  be  investigated  by  the  commissioners  with  a  view  to 
ascertain  any  mismanagement  or  neglect.  Provision  is  made  for  formal  complaint 
by  the  mayor  and  aldermen  of  a  city  or  the  trustees  of  a  township  as  to  passenger  or 
freight  rates  or  the  condition  or  management  of  the  road,  if  the  commissioners  find 
the  complaint  well  founded  they  are  to  notify  the  railroad  compa  ny  of  their  finding 
and  report  to  the  general  assembly.  A  copy  of  the  act  is  attached  to  this  paper  and 
respectfully  submitted  with  the  same.  This  act,  approved  March  23,  1878,  has  re- 
mained the  law  without  any  important  amendment  to  the  present  time,  except  legis- 
lation had  at  the  last  session  of  the  general  assembly.  It  may  be  said  that  the  law 
and  method  of  regulation  are  yet  upon  trial.  How  it  has  effected  the  welfare  of  the 
community  may,  we  think,  be  gathered  from  the  reports  of  the  commissioners  made 
annually,  beginning  with  the  year  1878  down  to  the  present  year. 

WANT  OF  POWER  IN  COMMISSION. 

It  is  certain  that  the  most  serious  objection,  at  least  in  the  mind  of  those  who  op- 
pose the  present  method  of  regulation  in  Iowa,  to  the  law  as  above  quoted  has  been 
that  the  commissioners  have,  as  it  is  asserted,  no  power  to  enforce  their  decisions  and 
ecommendations.  In  fact,  almost  every  decision  and  order  has  been  obeyed  by  the 
companies,  but  an  important  order  made  about  two  years  ago  was  disobeyed  by  one 
of  the  companies,  which  gave  force  to  the  argument  of  those  criticising  the  law,  and 
the  last  general  assembly  gave  power  to  the  commissioners  to  enforce  their  decisions 
in  ciTtain  instances.  By  the  terms  of  that  act  if  an  order  made  by  the  commissioners 
was  deemed  by  them  to  be  one  affecting  public  right,  and  should  be  disobeyed,  they 
are  required  to  certify  that  fact  to  the  attorney rgeneral,  who  is  to  bring  suit  in  the 
courts  in  the  name  of  the  State,  and  if  the  courts  find  that  the  commissioners  had 
authority  to  make  the  order,  such  orders  and  decrees  are  made  by  the  courts  and  such 
process  issued  as  shall  be  deemed  necessary  to  enforce  performance  on  the  part  of  the 
delinquent  company.  In  a  large  number  of  cases  that  come  before  the  commissioners 
the  whole  matter  involved  affects  only  private  right.  In  such  cases  there  is  no  power 
to  enforce  their  decision  except  that  unmeasured  power,  public  opinion,  if  the  decision 
appears  just  and  equitable  in  its  nature.  We  are  bound  to  say  that  acting  as  um- 
pires and  arbitrators  we  have  never  felt  the  necessity  of  any  other  power. 

Mr.  Peter  A.  Dey,  chairman  of  the  commission,  stated  (Testimony,  p. 
957)  that  the  number  of  complaints  they  received  had  increased  from 
year  to  year,  and  this  he  attributed  to  the  fact  that  the  "  people  have 


102  INTERSTATE    COMMERCE. 

learned  that  there  was  somebody  they  could  go  to,  and  that  a  small 
matter  would  receive  from  the  commission  just  as  close  attention  as  a 
matter  that  involved  large  amounts."  He  also  testified,  as  to  the  effect 
of  the  present  law,  that  the  feeling  between  the  corporations  and  the 
people  of  the  State  is  a  great  deal  better  than  it  was  seven  years  ago, 
and  attributed  this  to  the  fact  that  the  creation  of  a  commission  has 
enabled  the  people  to  see  both  sides  of  every  question  that  has  heen 
discussed.  Mr.  Dey  further  stated  that  the  commission  had  in  all  re- 
ceived between  six  hundred  and  seven  hundred  complaints,  of  which 
perhaps  one-third  or  one  half  were  well  founded,  and  that  no  difficulty 
had  been  experienced  in  having  the  railroads  change  their  action  in 
such  cases.  As  to  the  reason  for  the  change  from  the  former  to  the 
present  method  of  regulation  Mr.  Dey  testified  as  follows : 

Senator  PLATT.  You  Lad  four  years  of  trial,  as  I  understand  it,  in  the  State  of  Iowa 
to  regulate  the  transportation  companies  by  statute  without  a  commission  T 

Mr.  DEY.  Yes,  air. 

Senator  PLATT.  Do  you  agree  with  Judge  McDill  that  in  the  estimation  of  the  pub- 
lic that  was  a  failure? 

Mr.  DEY.  My  idea  is  that  the  Iowa  legislation,  for  fixed  legislation,  was  the  most 
perfect  that  man  could  get  up.  I  do  not  believe,  if  you  attempt  to  goveru  the  thing 
by  fixed  law,  that  it  is  possible  to  do  any  better  than  was  done  by  the  Iowa  legisla- 
tion, but  it  was  repealed. 

Senator  PLATT.  Repealed,  you  think,  because  of  the  sentiment  of  the  State  that 
you  cannot  control  it  by  fixed  legislation  alone? 

Mr.  DEY.  Yes,  sir. 

Senator  PLATT.  Or  was  it  repealed  because  the  railroad  companies,  for  the  time 
being,  got  it  repealed  ? 

Mr.  DEY.  No,  sir.  I  think  it  was  repealed  because*  the  majority  of  the  people 
thought  they  were  injured  by  it. 

KANSAS. 

Kansas  undertook  the  work  of  railway  regulation  in  1883.  The  act 
of  that  year  fixed  passenger  rates  at  3  cents  per  mile,  and  provided  for 
the  election  of  three  commissioners  by  the  executive  council  (State 
officers)  for  terms  of  three  years.  But  two  can  be  chosen  from  the  same 
political  party.  The  salaries  and  expenses  of  the  commissioners  are 
collected  from  the  railroads  pro  rata  like  other  taxes.  The  commissioners 
have  general  supervision  over  all  railroads,  express  companies,  sleep- 
ing-car companies,  and  all  others  doing  business  as  common  carriers. 
They  are  to  inquire  into  any  neglect  or  violation  of  the  laws  by  such 
companies,  and  to  examine  the  condition  and  management  of  each  rail- 
road. Whenever  in  their  judgment  any  company  fails  to  comply  with 
the  laws,  or  repairs,  or  improvements,  or  changes  in  its  rates  or  manner 
of  conducting  its  business  are  necessary,  the  commissioners  must  no- 
tify the  company  in  writing,  and  state  the  facts  in  their  annual  report 
to  the  governor.  Annual  reports  are  required  from  all  transportation 
companies,  giving  the  information  needed  for  the  commissioners'  report. 
The  commissioners  have  power  to  examine  the  books  and  papers  of  any 
company,  to  examine  its  officers  under  oath,  and  to  compel  the  attend- 
ance of  witnesses  like  courts  of  record.  Willful  obstruction  of  the 
commissioners  in  the  discharge  of  their  duties  or  a  refusal  to  give  in- 
formation is  made  a  misdemeanor.  The  companies  are  required  to  fur- 
nish cars  to  all  who  apply,  and  to  handle  freight  with  all  reasonable  dis- 
patch. They  are  prohibited  from  charging  one  person  or  corporation  a 


INTERSTATE    COMMERCE.  103 

greater  sum  than  is  charged  any  other  person  or  corporation  for  "  a  nke 
service  from  the  same  place,  or  upon  like  conditions,  and  under  similar 
circumstances,"  and  all  rebates  or  special  rates  and  concessions  shall  be 
open  to  all  persons  and  corporations  alike.  The  roads  are  also  prohib- 
ited from  charging  more  for  freight  from  any  point  than  a  fair  and  jnst 
proportion  of  the  price  charged  for  the  same  kind  of  freight  from  any 
other  point.  When  complaint  is  made  that  any  unreasonable  price  has 
been  charged,  the  commission  must  investigate  the  complaint,  and,  if 
it  is  sustained,  make  a  certificate  setting  forth  what  is  a  reasonable 
charge  for  the  service  rendered,  which  certificate  shall  be  prima  facie 
evidence  of  the  matters  therein  stated. 

Pooling  is  prohibited  under  a  penalty  of  $5,000  for  each  month  for 
which  earnings  are  divided.  The  roads  are  required  to  issue  duplicate 
freight  receipts  to  shippers  on  demand,  and  only  the  rates  named  therein 
can  be  collected.  When  the  commission  finds  that  any  company  has 
made  unreasonable  charges  they  are  to  require  them  to  make  such  a 
modified  charge  as  they  shall  deem  to  be  reasonable,  and  the  companies 
must  post  in  each  depot  such  modified  rates,  which  shall  in  all  actions 
be  deemed  and  held  by  the  courts  as  reasonable  rates.  The  commis- 
sioners and  the  railroads  are  prohibited  from  increasing  freight  rates 
without  sixty  days'  public  notice.  The  commission  must  investigate  and 
examine  the  freight  tariff  of  any  company  when  complaint  is  made  by  a 
city  council  or  township  trustee.  If  the  complaint  is  well  founded  it 
shall  so  adjudge,  and  shall  decide  what  is  a  reasonable  charge  for  such 
freights,  and  such  adjudication  shall  be  prima  facie  evidence  of  what 
is  a  reasonable  charge  for  such  service.  For  violating  any  of  the  pro- 
visions of  the  act  the  companies  become  liable  to  the  person  or  corpora- 
tion aggrieved  for  triple  damages,  with  costs  and  attorney's  fee.  For 
willful  violation  the  penalty  is  a  fine  of  $100  to  $5,000. 

The  commissioners  appointed  under  this  act  entered  upon  their  duties 
April  1.  1883.  In  their  first  report  they  review  the  provisions  of  the 
statute,  and,  referring  to  the  fact  that  their  powers  are  supervisory  and 
advisory,  they  say : 

To  have  invested  the  commission  with  the  power  to  enforce  its  own  orders,  it 
would  have  been  necessary  to  have  changed  the  character  of  the  board  and  the 
scope  of  its  functions  and  powers ;  it  would  have  been  necessary  to  have  given  the 
commission  all  the  powers  of  a  court  of  chancery,  to  be  exercised  within  the  scope 
of  its  assigned  duties,  with  such  ministerial  officers  attached  to  the  board  as  are 
usual  and  necessary  to  such  tribunals,  to  execute  its  injunctions  and  mandates.  It 
would  have  rendered  it  necessary  to  have  instituted  a  formal  investigation,  upon 
proper  complaint  and  notice  to  the  company  complained  of,  and  the  rendition  of  a 
formal  judgment  and  decree  upon  the  evidence  which  should  be  submitted  to  the 
board.  Manifestly,  in  such  case  it  would  have  been  improper  for  the  board  to  have 
acted  upon  knowledge  and  information  gathered  from  personal  information,  or  the 
ex  parte  statements  of  individuals,  as  much  so  as  it  would  be  for  regularly  organized 
courts  to  act  judicially  upon  evidence  which  has  never  been  disclosed  to  the  opposite 
party  to  the  suit.  The  supervisory  powers  of  the  commission  would  in  such  case 
extend  only  to  such  matters  as  should  be  formally  brought  before  it  by  complaint, 
and  no  such  complaint  would  be  made  until  some  one  had  become  the  suffering  victim 
of  some  neglect,  failure,  or  other  violation  of  dnty  on  the  part  of  a  railroad  company. 
Thus  the  chief  benefits  which  were  intended  to  be  secured  by  giving  the  commis- 
sioners general  supervisory  powers  would  be  sacrificed  by  imposing  upon  them  those 
limitations  in  the  exercise  of  functions  which  are  necessary  to  impress  upon  judicial 
decrees  the  weight  and  character  of  impartiality. 
Generally,  the  power  to  make  its  requirements  imperative  through  the  power  of 


104  INTERSTATE    COMMERCE. 

enforcement  is  not  necessary  to  'make  the  requests  and  recommendations  of  the 
hoard  felt  and  obeyed.  We  feel  justified  in  further  observing  that  as  the  irritation, 
the  friction,  and  the  misunderstandings  which  inevitably  arise  from  the  attempt  to 
adopt  an  extensive  and  well-established  system  of  transportation,  involving  vast 
pecuniary  interests  to  a  new  and  nntried  system  of  regulation,  imposing  restraints  at 
numerous  points  where  before  there  existed  unrestrained  freedom,  shall  wear  away, 
all  reasonable  requirements  or  advice  of  the  board  will  come  to  possess  the  character 
of  commands  to  railroad  managers. 

And  in  discussing  the  machinery  provided  for  the  enforcement  of 
rates  established  by  the  commissioners,  they  say : 

None  are  more  fully  alive  to  the  fact  than  the  managers  of  railroads  that  the  com- 
missioners are  not  simply  three  unarmed  men,  but  that  they  represent  the  majesty 
and  power  of  the  State,  and  that  their  official  utterance  concentrates  the  opinion  of 
a  million  people.  Unless  the  decision  of  the  board  upon  the  question  of  rates  should 
be  manifestly  unfair  or  unjust,  these  men  know  that  it  could  not  only  be  futile  to 
resist  them  or  refuse  to*  adopt  them,  but  that  to  do  so  would  tend  to  invite  a  public 
opinion  and  feeling  which  could  only  be  satisfied  by  measures  of  retaliation,  and  would 
result  in  a  state  of  things  detrimental  alike  to  the  interests  of  botk  people  and  the 
railroads.  The  burden  of  proving  to  the  satisfaction  of  a  court  and  jury  that  the 
commissioners'  rates  were  unjust  to  the  company  would  be  an  undertaking  of  such 
magnitude  and  difficulty,  at  least  in  the  majority  of  instances,  as  to  deter  even  the  rash 
and  presumptuous.  It  wonld  involve  the  proving  of  a  mass  of  minute  and  technical 
details,  which  can  only  be  grasped  and  their  sigaificance  perceived  by  the  prolonged 
study  of  trained  minds,  before  a  body  of  men  possessed  of  neither  aptitude  nor  the  ex- 
perience and  training  that  fitted  them  for  such  investigation,  and  with  every  presump- 
tion of  law  and  fact  against  the  company,  and  with  every  interest  and  prepossession  of 
the  triers,  the  jury,  arrayed  in  opposition.  Railroad  companies  have  never  courted 
the  verdicts  of  juries  to  any  great  extent,  even  in  cases  where  the  jury  was  entirely 
free  from  the  bias  of  self-interest ;  it  is  hardly  to  be  exnected  that  they  will  tempt 
them  against  strong  feelings  of  self-interest. 

The  first  complaint  as  to  rates  received  affected  the  Missouri  Pacific  Central  Branch 
and  the  Union  Pacific  roads.  After  careful  investigation  and  several  hearings  the 
board  made  an  order  determining  what  were  reasonable  rates  at  Beloit,  the  place  the 
complaint  came  from,  by  which  an  average  deduction  was  made  of  15  per  cent,  in  the 
rates,  and  indicated  the  necessity  of  revising  the  rates  over  the  whole  line  affected 
by  the  decision.  The  effect  of  this  decision  was  far-reaching,  and  its  result  finally 
was  that  the  board  formulated  a  schedule  for  the  Central  Branch  road,  which  was 
accepted,  and  that  the  Union  Pacific  ceased  to  operate  the  branch  line  affected,  so  as 
to  avoid  the  effect  of  the  decision  on  its  main  line. 

In  January,  1884,  the  board  passed  upon  the  complaints  against  the 
rates  of  the  Atchison,  Topeka  and  Santa  Fe"  Bailroad  Company.  Of 
their  action  they  say : 

On  nearly  all  the  roads  in  Kansas  two  tariffs  have  been  adopted,  in  addition  to 
special  tariff,  governing  rates  to  be  charged  Upon  two  classes  of  shipments;  and  as 
this  is  not  well  understood,  and  it  has  given  rise  to  considerable  confusion  in  the 
public  mind,  we  have  deemed  it  best  to  offer  a  brief  explanation  :  "The  local  tariff" 
prescribes  rates  upon  shipments  from  and  to  terminal  points  on  the  line;  for  instance, 
from  and  to  points  upon  the  Missouri  River;  the  "distance  tariff"  prescribes  rates 
upon  shipments  between  interior  points.  The  rates  established  by  the  "distance 
tariff"  are  higher  than  those  that  rule  on  the  "local  tariff."  The  higher  rates  of  the 
"distance  tariff"  are  based  ou  the  increased  cost  of  service  on  short  hauls,  increased 
switching,  and  more  frequent  loading  and  unloading,  occasioning  longer  detention 
of  cars  upon  side  tracks,  and  the  frequent  necessity  that  exists  to  haul  empty  ears 
from  distant  points  to  the  place  where  freight  is  to  be  taken  up.  Either  this  class  of 


-INTERSTATE  COMMERCE.  105 

shipments  mnst  bear  a  rate  in  some  measure  proportioned  to  the  increased  cost  of 
service  or  the  burden  must  be  distributed  over  all.       • 

The  board  found,  however,  that  the  purely  local  traffic  was  bearing  more  than  a 
fair  share  of  the  tax,  and  reduced  it  about  30  per  cent.,  while  the  through  rate  was 

reduced  on  an  average  not  to  exceed  15  per  cent. 

»  *  *  *  *  »  * 

In  a  genera] -freight  schedule  it  is  impracticable  to  provide  for  every  local  interest. 
A  tariff  of  rates  rnay  favorably  affect  all  the  interests  of  one  locality,  and  may  preju- 
dicially affect  some  particular  interest  of  another,  and  this  can  only  be  remedied  by 
some  special  provision  adapted  to  the  interests  involved,  or  by  a  tariff  so  flexible  as 
to  admit  of  readjustments.  Herein  lies  one  chief  objection  to  a  tariff  of  maximum 
rates  fixed  by  law. 

In  considering  the  subject  of  rates  at  common  points  the  commission- 
ers refer  to  the  section  of  the  statute  prohibiting  any  discrimination  in 
rotes,  and  declaring  that  no  company  shall  "charge  more  for  trans- 
porting freight  from  any  point  on  its  line  than  a  fair  and  just  propor- 
tion of  the  price  it  charges  for  the  same  kind  of  freight  transported 
from  any  other  point,"  and  say : 

Out  of  this  section  the  commissioners  early  encountered  a  practical  difficulty.  The 
last  clause  of  the  section  (the  one  quoted  above),  if  literally  interpreted,  would  seem 
to  require  the  establishment  of  equal  mileage  rates,  and  would  defeat  what  the  peo- 
ple have  been  striving  to  bring  about  among  railroads  in  the  State,  viz,  competition 
for  business.  The  application  of  the  rule,  literally  and  universally  over  all  the  roads, 
would  not  only  defeat  competition,  but*it  would  deprive  those  living  at  common 
points  of  those  advantages  and  facilities  with  which  circumstances  had  favored 
them,  and  deny  to  the  road  whose  route  was  the  longest  to  a  terminal  station  the 
privilege  of  doing  business  at  such  common  point.  To  illustrate  :  Two  roads,  whose 
routes  have  a  common  terminus,  pursue  different  routes,  but  come  in  contact  with 
each  other  at  one  or  more  points  along  the  route,  or  perhaps  terminate  at  another 
common  point,  but  the  roads  are  of  unequal  length.  The  short  road,  i.  e.,  the  road 
having  the  most  direct  and  nearest  route  to  a  common  market,  fixes  the  rates  at  the 
common  points.  The  long  road  must  adopt  the  same  rates  at  all  common  points  that 
the  shorter  road  prescribes,  or  go  out  of  business  at  those  points. 

But  if  rates  are  to  be  computed  upon  a  strictly  mileage  basis,  the  rates  at  the  com- 
mon points  must  rule,  as  a  basis,  upon  the  longer  road  at  all  intermediate  points  be- 
tween its  terminus  and  common  points;  this  would  in  many  instances  be  ruinous, 
and  the  longer  road  would  be  compelled  to  relinquish  any  share  in  the  business  at 
such  points.  This  would  benefit  no  one.  It  would  not  lower  the  rates  anywhere. 
It  would  deprive  the  longer  road  of  the  right  to  participate  in  the  business  at  the 
common  points,  and  the  people  of  such  points  of  the  benefits  of  competition.  If  a 
railroad,  which  being  the  longest  line  between  a  common  point  and  a  terminus,  was 
compelled  to  adopt  rates  upon  an  equal  mileage  basis,  and  it  chose,  nevertheless,  to 
strive  for  the  business  at  such  common  point,  it  would  result  that  it  would  thereby 
be  compelled  to  carry  the  same  distance  at  proportionately  less  rates  than  the  shorter 
road.  It  must  either  do  this  or  abandon  that  part  of  its  road  that  comes  in  competi- 
tion with  the  shorter  route.  This  is  unjust,  and  bad  policy.  The  board  have  found 
it  necessary  to  give  to  this  section  such  interpretation  as  would  obviate  these  difficul- 
ties, and  would  tend  to  preserve  the  rights  of  the  railroad  companies  at  common 
points,  and  preserve  the  active  competition  which  we  believe  it  was  not  the  purpose 
of  the  legislature  to  destroy. 

In  doing  this  we  think  that  we  are  not  doing  violence  either  to  the  letter  or  spirit 
of  the  law.  We  think  that  the  whole  section  should  be  construed  together — that  the 
qualifying  clause,  "  or  upon  like  condition  and  under  similar  circumstances,"  must 
apply  to  and  qualify  the  latter  as  well  as  the  former  clauses  of  the  section.  To  con- 
strue it  otherwise  would  be  productive  of  great  confusion,  and  of  great  wrongs,  and 
nstead  of  equalizing  rates,  it  would  create  gross  inequality  everywhere. 


106  INTERSTATE    COMMERCE. 

In  their  second  annual  report,  covering  their  work  during  the  year 
1884,  the  commissioners  s'ay : 

The  board  are  in  numerous  instances  able  to  settle  causes  of  complaint  without  the 
necessity  for  formal  investigation  and  decision,  either  through  personal  interviews 
with  railroad  officers,  or  through  correspondence. 

The  orders  and  recommendations  of  the  board  have  during  the  past  year  been,  in 
nearly  every  instance,  adopted  and  obeyed  by  the  managers  of  railroads.  They  h;ive 
quite  promptly  and  adequately  responded  to  the  requests  of  the  board  for  informa- 
tion pertaining  to  their  roads. 

In  this  report  the  commissioners  review  at  considerable  length  their 
work  in  the  matter  of  establishing  maximum  freight  rates  and  the 
difficulties  that  were  met  with  in  their  efforts  to  harmonize  diverse  inter- 
ests. The  following  extracts  from  their  remarks  upon  this  subject  will 
be  of  interest : 

Two  roads  may  have  an  equal  tonnage  per  mile  of  road  operated,  their  rates  of 
eharges  upon  freight  may  be  identical  upon  the  same  classes  of  goods  and  mer- 
chandise carried,  the  expense  of  operating  the  respective  roads  may  bear  an  equal 
ratio  to  the  tonnage  carried,  and  yet  their  earnings  may  be  very  dissimilar.  This  is 
brought  about  by  the  character  of  the  business  brought  to  the  two  lines,  respectively. 
The  road  that  carries  the  larger  tonnage  per  mile  of  those  classes  of  goods  upon 
which  the  rates  are  highest  will  make  a  better  showing  as  to  net  earnings.  If  two 
railroads,  situated  in  respect  to  their  business  as  above  indicated,  are  required  to 
adopt  the  same  rates,  the  one  may  make  a  reasonable  profit,  while  the  other  may  suf- 
fer continual  loss. 

The  same  result  is  brought  about  in  other  ways.  For  instance,  the  business  of  one 
company  may  (and  this  is  frequently  the  case)  require  the  haulage  of  a  larger  number 
of  empty  cars  over  its  line  than  another,  and  since  the  expense  of  cost  of  hauling  an 
empty  car  is  nearly  as  great  as  hauling  the  same  car  loaded  with  paying  freight,  its 
expenses  are  in  greater  ratio  to  its  business.  The  cost  of  fuel,  labor,  and  supplies 
are  important  items  to  be  considered  in  this  connection,  and  these  vary  in  different  lo- 
calities. 

*  ****** 

But  notwithstanding  these  elements  of  diversity  of  c  onditions  obtaining  among 
different  roads  in  the  same  State,  with  numerous  others  not  mentioned — such,  for  in- 
stance,as  the  original  cost  of  some  lines  being  greater  than  others,  the  expense  of  opera  - 
ation  being  greater  in  some  instances  than  in  others  by  reason  of  grades,  curves,  expen- 
sive bridging,  &c. — such  is  the  relation  of  the  business  to  the  greater  portion  of  the 
railroads  in  the  State  that  it  is  quite  impossible  to  make  a  class  of  rates  upon  one 
road  without  affecting  those  upon  others.  *  *  *  It  is  evident,  therefore,  that  the 
longer  route  from  the  common  market  to  the  common  point  of  consumption  must  com- 
pete for  this  carrying  trade  also  at  rates  equal  to  those  that  the  short  routes  can 
afford.  These  examples  are  perhaps  sufficient  to  illustrate  the  principle  heretofore 
stated,  that  the  railroad  system  of  the  State  is  so  related  and  connected,  that,  how- 
ever undesirable  it  might  be  to  bring  about  such  a  result,  it  is  impossible  to  reduce 
rates  upon  one  railroad  without  affecting  the  rest.  This  is  a  consideration  of  very 
great  importance  in  determining  the  rates  which  should  prevail  at  any  given  time. 
A  system  of  rates  under  which  one  road  might  operate  without  detriment  to  its  per- 
manent prosperity,  would  totally  paralyze  another  road  whose  relative  position  would 
render  the  adoption  of  the  same  system  compulsory  upon  it.  Indeed,  the  necessity 
under  which  comparatively  new  and  weak  lines  find  themselves  to  conform  their 
rates  of  charges  to  those  either  established  by  strong  roads,  or  devised  for  them, 
renders  a  very  large  amount  of  railroad  property,  both  in  this  and  other  States,  wholly 
unprofitable. 


INTERSTATE    COMMEECE.  107 

As  to  their  own  action  the  commissioners  state  that  the  reductions  in 
rates  effected  through  them  during  the  year  apply  chiefly  to  the  middle 
and  western  portion  of  the  State,  where  rates  had  not  been  reduced 
with  the  increase  in  population  as  they  had  been  in  the  eastern  part  of 
the  State.  Besides  these  reductions  in  the  tariff'  material  reductions 
u}:»m  a  number  of  staple  articles  were  made  by  a  change  in  the  classifi- 
cation. It  is  also  shown  that  prior  to  the  enactment  of  regulative  legis- 
lation there  had  been  a  reduction  of  about  40  per  cent,  from  the  rates 
first  charged  in  the  State,  brought  about  by  competition  and  other 
causes,  which  can  neither  be  evaded  or  controlled  by  the  companies 
affected. 

KENTUCKY. 

The  Kentucky  railroad  commission  was  established  by  an  act  ap- 
proved April  G,  1882.  This  act  defines  and  prohibits  extortion  and 
unjust  discrimination,  but  it  is  expressly  provided  that  it  shall  not  pre- 
vent the  issuing  of  commutation,  excursion,  or  thousand-mile  tickets,  or 
control  the  rates  on  interstate  freights.  The  penalty  for  extortion  or 
unlawful  discrimination  is  a  fine  of  from  $100  to  $1,000  for  the  first 
offense,  $500  to  $2,000  for  a  second  conviction,  and  $2,000  to  $5,000  for 
a  third  conviction.  Actions  are  to  be  prosecuted  by  indictment  or  upon 
information  by  the  railroad  commissioners,  and  the  jury  is  to  be  gov- 
erned by  a  preponderance  of  the  evidence.  The  railroads  are  also  made 
liable  to  the  parties  aggrieved  for  triple  damages,  with  costs  and  attor- 
ney's fees.  Three  commissioners  are  appointed  biennially  by  the  gov- 
ernor, the  districts  from  which  they  shall  be  chosen  being  specified. 
Annual  reports  are  required,  and  the  act  specifies  thirty-six  subjects  to 
be  reported  upon.  The  commissioners  may  also  propound  additional 
interrogatories.  It  is  made  the  duty  of  the  commissioners  to  "  examine 
into  the  condition,  management,  and  all  other  matters  concerning  the 
business  of  railroads  in  this  State,  so  far  as  the  same  pertain  to  the  re- 
lation of  such  railroads  to  the  public,  and  whether  such  railroad  corpo- 
rations, their  officers  and  employe's,  comply  with  the  laws  of  this  State." 
It  is  their  duty  to  prosecute  all  such  violations  of  law  as  may  come  to 
their  knowledge.  They  are  authorized  to  examine  railroad  officials  and 
employe's  under  oath  and  to  require  the  attendance  of  witnesses.  They 
are  also  to  hear  and  determine  complaints  of  extortion  and  unlawful 
discrimination  and  award  judgment.  Unless  the  same  be  satisfied,  a 
copy  of  the  award  is  to  be  filed  with  the  court  having  jurisdiction  of 
such  controversy,  on  which  execution  shall  issue  as  on  other  judgments, 
but  any  party  dissatisfied  with  said  award  may  within  ten  days  file  a 
traverse  thereto,  whereupon  the  case  is  to  be  docketed  for  trial.  If  the 
matter  in  controversy  exceeds  $20  either  party  may  demand  a  jury 
trial.  If  it  does  not,  the  case  is  to  be  summarily  decided  by  the  court. 

LOUISIANA. 

The  constitution  of  Louisiana,  adopted  in  1879,  prohibits  the  ficti- 
tious issue  of  stock  by  railroad  companies,  and  declares  railroads  pub- 
lic highways  and  railroad  companies  common  carriers.  ><o  restric- 
tive or  regulative  railroad  legislation  of  any  kind  appears  to  have  been 
enacted  by  the  general  assembly,  or  is  now  in  force. 

MAINE. 

The  railroad  commission  of  Maine  was  established  in  1858,  and,  as 
stated  in  its  report  for  1884,  "  the  prime  object  in  creating  a  board  of 
railroad  commissioners  was  to  secure  the  safety  of  the  general  public 


108  INTERSTATE    COMMERCE. 

by  providing  a  board  of  officials  whose  duty  should  be  to  see  that  all 
railroads  in  tin1  State  and  rolling  stock  are  kept  in  suitable  repair  and 
safe  for  travelers."  This  purpose  has  been  satisfactorily  accomplished 
by  the  board,  and  in  the  report  mentioned  the  present  commissioners 

say: 

While  in  many  of  the  States  the  time  of  the  commissioners  is  largely  taken  np  in 
adjusting  questions  and  controversies  between  their  several  railroad  companies  and 
between  these  corporations  and  municipal  and  other  corporate  bodies,  and  with  in- 
dividuals, we  are  pleased  to  say  that  the  management  of  the  several  railroads  in  this 
State  in  dealing  with  each  other  and  with  individuals  and  corporations  has  been 
such  as  to  rarely  call  for  the  exercise  of  the  authority  conferred  by  statute  upon  the 
board  of  commissioners,  or  to  require  additional  legislation  in  that  respect. 

The  statutes  of  Maine  provide  for  the  incorporation  of  railroad  com- 
panies under  a  general  law  well  guarded  in  its  provisions.  Articles  of 
incorporation  cannot  be  issued  without  the  approval  of  the  railroad  com- 
missioners, nor  can  the  work  of  construction  be  commenced  until  they 
have  approved  the  location  of  the  proposed  route.  Eailroads  are  au- 
thorized to  establish  and  collect  such  tolls  as  their  directors  deem  fair 
and  reasonable,  but  on  sufficient  complaint  by  interested  and  responsi- 
ble parties  the  commissioners  may,  after  investigation,  revise  and  es- 
tablish rates.  Each  railroad  is  required  to  fix  its  rates  of  toll  per  mile 
for  the  transportation  of  timber,  wood,  and  bark,  by  the  ton,  cord,  or 
thousand  feet,  in  September  of  each  year,  and  to  keep  the  same  posted 
at  all  stations  during  the  year,  under  a  penalty  of  $100  fine.  The  rates 
established  by  the  companies  are  subject  to  revision  by  the  legislature. 

Three  railroad  commissioners  are  appointed  by  the  governor  for  terms 
of  three  years,  and  are  paid  $5  per  diem  by  the  railroads  on  which  their 
services  are  rendered  while  employed.  They  are  required  to  annually 
examine  the  physical  condition  of  each  road,  and  give  a  certificate  as  to 
the  same.  They  may  require  necessary  repairs  and  improvements,  and, 
if  necessary,  stop  the  running  of  trains.  When  connecting  roads  dis- 
agree as  to  rates  and  running  arrangements  their  differences  are  to  be 
determined  by  the  board.  The  commissioners  may  order  the  erection 
of  depots  and  stations  needed  by  the  public,  and  must  examine  into  the 
cause  of  serious  accidents.  Provision  is  made  for  securing  annual  re- 
ports from  the  companies. 

The  statutes  also  give  the  consignor  the  right  to  determine  over  what 
lines  goods  shall  be  forwarded ;  prohibit  discrimination  by  a  railroad 
between  passengers  and  freight  transported  entirely  over  its  own  line 
and  passengers  and  freight  destined  for  other  roads ;  requires  each 
railroad  to  give  the  same  rates  and  advantages  to  one  road  as  to  an- 
other, and  also  requires  railroads  to  give  cars  containing  animals  con- 
tinuous passage  and  the  preference  over  other  freight,  besides  food, 
water,  and  proper  rest. 

No  difficulty  is  experienced  in  carrying  out  these  statutory  provis- 
ions, as  appears  by  the  following  paragraph  from  the  last  report  of  the 
commission : 

At  the  time  of  the  organization  of  the  railroad  commission  there  were  about  400 
miles  of  railroad  in  this  State;  at  the  present  time  there  are  1,148.52  miles.  In  clos- 
ing this  report,  the  commissioners  tender  their  thanks  to  the  officers  of  the  different 
railroads  for  the  uniform  courtesy  and  kindness  with  which  they  have  been  received 
ami  treated,  and  whenever  defects  have  been  discovered  a  simple  suggestion  from  the 
commissioners  has  generally  been  sufficient  to  secure  immediate  attention.  In  but  a 
few  instances  has  it  been  necessary  to  issue  (lie  statute  notice  in  order  to  accomplish 
the  desired  result. 


INTERSTATE    COMMERCE.  109 

MARYLAND. 

The  general  railroad  legislation  of  the  State  of  Maryland  can  be 
briefly  stated.  An  act  passed  in  1876  provides  that  if  any  person  is  ag- 
grieved by  any  transportation  company  by  reason  of  anything  done  or 
omitted  to  be  done  by  such  company  in  violation  of  its  duty  in  regard 
to  the  transportation  of  persons  or  property,  such  person  may  apply 
by  petition  in  a  summary  way  to  the  circuit  court,  for  relief  against  such 
alleged  grievance,  and  the  court  is  authorized  to  fully  investigate  the 
complaint,  and  grant  and  enforce  proper  relief. 

The  general  law  for  the  incorporation  of  railroad  companies  limits 
passenger  rates  to  3  cents  per  mile,  and  freight  rates  to  5  cents  per  ton 
per  mile,  except  that  the  rates  on  coals,  ores,  and  other  minerals  un- 
limited to  1£  cents  ijer  ton  per  mile.  The  railroads  are  required  to 
make  annual  reports  to  the  comptroller  of  the  State. 

MICHIGAN. 

The  history  of  the  construction  of  railroads  by  the  State  of  Michigan 
and  of  the  legislation  of  that  State  on  the  subject  of  railroad  regulation 
is  set  forth  so  fully  in  the  very  complete  statement  furnished  by  William 
McPherson,  jr.,  the  commissioner  of  railroads,  and  Wyllys  C.  liansom, 
deputy  commissioner  (which  appears  in  the  Appendix,  pp.  32-37),  that 
the  committee  invites  attention  to  that  statement,  and  asks  to  have  it 
considered  as  part  of  this  report. 

In  addition  it  is  only  necessary  to  say  that  a  board  of  commissioners 
was  appointed  to  carry  out  the  provisions  of  the  restrictive  legislation 
of  1873,  who  in  their  first  report  pronounced  the  law  faulty  in  the  fol- 
lowing respects : 

1.  It  bears  heavily  on  the  n^w  roads. 

2.  The  law  not  sufficiently  elastic. 

3.  The  law  takes  no  account  of  short  distances. 

4.  The  law  fixes  maxima  for  car-loads  only. 

5.  The  law  treats  connecting  lines  as  continuous,  but  is  silent  as  to  division  of 
earnings. 

6.  The  law  imposes  duties  impossible  of  accomplishment. 

7.  The  law  inadequately  provides  for  enforcement. 

In  their  second  report,  after  another  year  of  thorough  investigation, 
the  commissioners  repeated  their  former  conclusions,  and  showed  that 
a  larger  part  of  the  "  Potter  law"  rates  were  so  impracticable  that  they 
were  disregarded  by  the  railroads  with  the  tacit  consent  of  the  people. 

MINNESOTA. 

There  have  been  several  changes  in  the  system  of  railroad  regulation 
adopted  by  the  State  of  Minnesota.  In  1871  an  attempt  was  made  to 
establish  rates  and  prescribe  the  classification  of  freights  by  statute, 
but  this  plan  did  not  prove  satisfactory  and  was  abandoned  in  1874, 
when  a  board  of  commissioners  was  created  and  given  power  to  prose- 
cute violations  of  law  and  fix  rates.  The  railroads  accepted  the  uni- 
form tariff  prescribed,  and  lived  up  to  it  so  strictly  as  to  succeed  in 
making  it  unpopular,  especially  at  places  where  lower  rates  had  pre- 
viously been  enjoyed  by  reason  of  competition  or  other  advantages, 
and  the  result  was  th<tt  the  law  was  repealed  in  1875,  when  provision 
was  made  for  the  election  by  the  people  of  one  commissioner,  with  ad- 


110  INTERSTATE    COMMERCE. 

visory  powers  and  inspection  duties.  The  incumbents  of  this  office, 
while  able  to  adjust  some  of  the  differences  arising  between  the  people 
and  the  railroads,  have  urged  the  enlargement  of  the  authority  of  the 
commissioner.  There  being  no  way  under  that  law  by  which  the  com- 
missioner could  bring  suit  in  case  the  road  failed  to  comply  with  his 
decisions,  they  exercised  their  own  pleasure  in  the  matter.  Mr.  E.  S. 
Warner,  the  secretary  of  the  commission,  testified  as  to  the  action  of 
the  companies  in  such  cases  that — 

It  would  be  owing  somewhat  to  the  complaint,  how  much  it  involved,  and  what 
the  principle  was.  If  it  was  a  trivial  affair  it  was  almost  always  adjusted.  If  it  in- 
volved a  principle,  or  was  contrary  to  their  rules  and  regulations,  or  if  it  involved 
anything  of  any  amount,  it  was  almost  universally  not  acquiesced  in.  (Testimony, 
p.  1354.) 

The  result  was  that  the  complainants  were  left  to  their  own  resources, 
and  almost  invariably  concluded  that  they  could  not  afford  to  litigate 
with  the  railroad  company.  Mr.  Warner  further  stated  that  he  knew 
of  but  two  cases  where  suits  had  been  instituted.  Both  parties  had 
won,  and  one  had  informed  the  office  that  the  expense  of  the  litigation 
had  been  three  times  what  he  gained  from  the  railroad. 

In  his  report  for  1884  General  Baker,  the  railroad  commissioner,  pro- 
nounced the  railway  code  of  Minnesota  "  the  most  meager  and  defec- 
tive of  any  of  the  Northern  States,"  saying  that  "  the  legislative  action 
of  1871  was  carried  to  such  an  extreme  that  in  the  reaction  the  people 
of  the  State  naturally  feared  to  reopen  the  subject,"  and  he  forcibly 
urged  the  adoption  of  a  "more  adequate  and  advanced  system  of  State 
supervision,  more  in  harmony  with  the  progress  of  events  and  the  ne- 
cessities which  have  arisen." 

Action  in  accordance  with  these  recommendations  and  the  public 
demand  for  reasonable  controlling  and  restrictive  legislation  was  taken 
by  the  last  legislature,  which  adopted  a  new  railway  code,  from  which 
good  results  are  confidently  anticipated.  As  one  of  the  latest  enactments 
of  this  character  and  in  a  State  which  has  gone  to  both  extremes  in  its 
railway  legislation,  its  provisions  will  be  of  interest. 

The  act,  which  was  approved  March  5, 1885,  provides  for  the  appoint- 
ment by  the  governor  of  three  "  railroad  and  warehouse  commissioners" 
for  terms  of  two  years,  and  makes  ineligible  persons  interested  in  any 
way  in  any  railroad  or  warehouse.  They  are  paid  $3,000  per  annum  by 
the  State,  and  give  bonds  in  the  sum  of  $20,000.  Annual  reports  are 
required  of  the  companies  upon  forty-one  subjects  specified  in  the  ad . 
The  commissioners  are  to  make  an  annual  report  of  their  doings,  as  well 
as  a  special  biennial  report  upon  the  subject  of  amending  the  railroad 
laws  of  the  State.  They  are  required  to  examine  into  the  condition  and 
management  and  all  other  matters  concerning  the  business  of  railroads, 
and  visit  the  various  stations  on  the  lines  of  each  railroad  ;  and  one  of 
their  number  must  visit  each  county  in  which  there  is  a  railroad  station 
and  personally  inquireinto  the  management  of  railroad  business  at  least 
once  in  three  months.  This  requirement  ought  to  bring  the  commis- 
sioners into  close  relations  to  the  people.  They  are  given  ample  powers 
for  such  examinations  and  investigations  and  for  the  examination  of 
witnesses  under  oath,  suitable  penalties  being  provided  for  a  refusal  to 
testify  or  to  furnish  reports  called  for. 

This  act  has  broken  up  the  monopoly  of  elevators  formerly  given.  It 
requires  the  railroads  to  permit  any  person  to  construct  and  operate 
elevators  at  any  of  their  stations,  and  to  furnish  the  necessary  facilities. 
It  also  requires  the  companies,  upon  reasonable  demand,  to  furnish 


INTERSTATE    COMMERCE.  Ill 

transportation  for  all  grain  stored  in  such  warehouses  and  elevators, 
and  to  keep  at  each  station  a  register  of  the  applications  made  for  cars 
and  their  order,  and  to  serve  every  applicant  in  his  order,  without  dis- 
crimination. For  the  first  time  in  that  State  shippers  can  procure  cars 
in  the  order  of  their  application.  Another  section,  which  prohibits  un- 
just discrimination  and  extortion  and  makes  the  car-load  the  unit  of 
transportation,  reads  as  follows  : 

SEC.  20.  No  such  railroad  corporation  shall  be  guilty  of  extortion,  nor  of  any  unjust 
discrimination  as  topassenger  or  freight  rates,  or  the  rates  forthe  use  and  transportation 
of  railroad  cars  upon  its  road,  or  upon  any  of  the  branches  thereof,  or  upon  any  rail- 
road connected  therewith  -which  it  has  the  right,  license,  or  permission  to  operate, 
control,  or  use  within  this  State,  or  in  furnishing  facilities  for  the  loading,  unload- 
ing, handling,  or  transporting  of  freights,  or  shall  make  any  unjust  discrimination 
whatever  against  any  person  or  persons,  town,  village,  city,  station,  or  location  in 
this  State,  or  shall  charge,  demand,  or  receive  from  any  person,  company,  or  corpora- 
tion for  the  transportation  of  persons  or  property,  or  for  any  other  service,  a  greater 
sum  than  it  shall  at  the  same  time  charge,  demand,  or  receive  from  any  person,  com- 
pany, or  corporation  for  a  like  service  from  the  same  place  upon  like  conditions  and 
uuder  similar  circumstances:  Provided,  That  no  railroad  company  shall  charge  or 
receive  from  any  person  a  higher  rate  per  ton  per  mile  for  one  car-load  of  freight  than 
for  a  greater  number  of  car-loads  per  car  under  like  conditions  and  circumstances. 

In  cases  of  violation  of  the  law  it  is  made  the  duty  of  the  commission- 
ers to  institute  suits,  which  the  attorney -general  must  prosecute.  They 
are  also  required  to  notify  the  railroad  companies  of  any  changes  in 
rates,  &c.,  which  they  may  deem  expedient,  and  may  institute  suits  to 
enforce  their  recommendations. 

When  the  committee  visited  Minnesota  the  new  commissioners  had 
been  in  office  only  about  two  months,  and  had  been  devoting  their  at- 
tention to  organizing  a  State  system  of  grain  inspection  similar  to  that 
in  operation  in  Illinois.  What  they  hope  to  accomplish  under  this  new 
legislation  is,  however,  indicated  by  the  following  extract  from  the 
statement  of  Commissioner  Becker : 

I  have  no  doubt  that  this  commission  here  is  going  to  do  not  only  for  the  railroad 
companies,  but  for  the  people  of  tha  State,  a  great  work.  I  believe  that  it  is  going 
to  do  a  work  in  the  way  of  educating  the  people  of  the  State  as  well  as  restraining 
the  railroad  companies.  There  are  a  great  many  complaints  nnder  the  law  that  are 
trivial  and  are  not  well  founded  ;  but  nevertheless  they  are  complaints,  arid  they  con- 
stitute grievances.  And  until  the  party  who  makes  the  complaint  or  grievance  is 
informed  fully  on  the  subject  as  to  what  his  rights  may  be,  or  what  the  rights  of  the 
railroad  company  are,  it  is  a  complaint  or  grievance  ;  and  oftentimes  those  complaints 
or  grievances  can  be  done  away  with  by  a  fair  representation  to  the  party  complain- 
ing. So  that  I  say  the  commission  itself  is  an  educator  of  the  people,  as  well  as  a 
restraining  power  upon  the  corporation.  (Testimony,  p.  1350. ) 

MISSISSIPPI. 

The  Mississippi  railroad  commission  was  established  by  an  act  ap- 
proved March  11,  1884,  which  declared  railroads  public  highways  and 
prohibited  extortion  and  discrimination.  Under  its  provisions  the  party 
injured  may  recover  double  damages  by  commencing  suit  within  ninety 
days  after  the  cause  of  action  accrues.  Extortion  is  also  made  a  mis- 
demeanor, and  the  penalty  therefor  fixed  at  a  fine  of  from  $10  to  $500, 
but  the  railroads  are  not  liable  to  this  if  the  rates  charged  have  been 
previously  approved  by  the  commission.  The  act  created  a  commission 
of  three  members,  appointed  by  the  governor  for  terms  of  two  years. 


112  INTEKSTATE    COMMERCE. 

The  railroads  were  required  to  submit  their  tariffs  to  the  commissioners, 
and  it  was  made  their  duty  to  revise  the  same,  determine  whether  the 
charges  are  unreasonable  or  discriminating,  and  to  increase  or  reduce  the 
rates  from  time  to  time  as  justice  to  the  public  and  the  railroads  may 
require  and  as  experience  may  show  to  be  just.  When  approved  by 
the  commissioners  the  tariffs  must  be  posted  at  all  stations,  and  rebates 
are  prohibited  under  pemilry  of  a  fine  of  from  $10  to  $500.  The  rail- 
roads are,  however,  allowed  to  carry  free  or  at  reduced  rates  for  re- 
ligious or  charitable  purposes,  or  to  fairs  or  for  pleasure  excursions.  It 
is  the  duty  of  the  commissioners  to  hear  all  complaints  against  the 
tariffs.  If  there  appears  justice  in  the  complaint,  they  shall  notify  the 
company  that  at  a  time  set  the  tariff  will  be  revised  as  to  the  particu- 
lars complained  of,  and  then  fully  investigate  the  matter  and  give 
notice  of  the  changes,  if  any,  determined  upon.  The  railroads  are  re- 
quired to  furnish  the  commissioners  all  the  information  called  for,  to 
notify  them  in  case  of  accidents,  and  to  make  to  them  quarterly  re- 
turns of  their  business.  The  pommissioners  are  required  to  inspect 
depots  and  see  that  suitable  accommodations  are  provided.  They  must 
determine  every  matter  in  writing,  and  a  copy  of  such  determination, 
certified  by  the  secretary,  is  made  prima  facie  evidence  in  all  civil  cases 
that  such  determination  was  right  and  proper.  They  may  administer 
oaths  and  enforce  the  attendance  of  witnesses.  The  penalty  for  violat- 
ing the  act  or  the  tariffs  fixed  by  the  commissioners  is  a  fine  of  $500 
for  each  offense.  The  commissioners  are  to  institute  proceedings  in 
such  cases  through  the  district  attorneys,  and  suits  cannot  be  dismissed 
without  their  consent.  A  supplementary  act  provides  that  the  former 
shall  not  be  so  construed  as  to  require  the  commissioners  to  investi- 
gate or  call  upon  the  companies  for  rates  of  charges  from  any  point 
outside  the  State  to  points  outside,  or  to  in  any  way  interfere  with  such 
charges. 

An  act  approved  March  12, 1884,  makes  it  a  misdemeanor  for  any 
legislative,  executive,  judicial,  or  ministerial  officer  of  the  State,  or  any 
person  holding  an  office  of  honor,  trust,  or  profit  under  the  laws  of  the 
State,  to  travel  upon  any  railroad  in  the  State  without  paying  abso- 
lutely the  same  fare  as  is  required  of  passengers  generally.  It  is  also 
made  a  misdemeanor  for  any  employ^  of  a  railroad  to  permit  such  per- 
son to  travel  without  paying  fare.  The  penalties  are :  For  the  first  of- 
fense, a  fine  of  $25;  for  the  second,  a  fine  of  not  less  than  $100  or  im- 
prisonment for  ten  days;  for  the  third,  a  fine  of  $500  and  imprisonment 
for  thirty  days. 

The  committee  has  received  no  response  to  the  communications  ad- 
dressed to  the  railroad  commissioners  of  Mississippi,  and  has  been  un- 
able to  procure  any  reports  they  may  have  made,  but  is  informed  that 
since  their  appointment  last  year  they  have  been  energetically  engaged 
in  the  performance  of  the  duties  imposed  upon  them,  and  that  no  change 
in  the  law  has  since  been  made.  Proceedings  were  instituted  by  the 
railroad  companies  to  test  the  validity  of  the  Mississippi  legislation. 
The  case  is  pending  before  the  United  States  Supreme  Court,  and  a 
decision  is  sooa  expected. 

MISSOUBI. 

The  constitution  of  Missouri  declares  railroads  to  be  public  highways 
and  railroad  companies  to  be  common  carriers.  It  also  requires  the  gen- 
eral assembly  to  pass  laws  to  correct  abuses,  and  to  prevent  unjust  dis- 
crimination and  extortion  in  freight  and  passenger  charges,  and  also  to 


INTERSTATE    COMMERCE.  113 

pass  laws  from  time  to  time  establishing  reasonable  maximum  rates, 
and  to  enforce  all  such  laws  by  adequate  penalties. 

The  present  railroad  commission  was  established  in  1875,  when  the 
existing  legislation  was  enacted.  The  general  features  of  the  law  are 
stated  in  the  testimony  of  George  0.  Pratt,  chairman  of  the  commission 
(testimony  p.  797),  from  which  it  appears  that  the  law  distinctly  con- 
templates the  collection  and  distribution  of  information  on  the  subject 
of  railroad  transportation,  the  supervision  of  the  structures  to  secure 
safety  to  life  and  property  in  transit,  and  the  regulation  of  rates.  Mr. 
Pratt  says  it  was  the  intention  of  the  legislature  to  enable  the  commis- 
sioners to  fix  maximum  rates  on  any  article  of  freight,  but  this  intention 
was  not  fully  carried  out  in  the  law  as  passed.  The  act  divides  all 
freight  into  four  general  classes  and  seven  special  classes.  It  fixes 
rates  on  the  seven  special  classes  and  places  a  few  articles  in  each 
class.  It  does  not  fix  any  rate  on  any  of  the  four  general  classes,  nor 
does  it  place  any  articles  in  them.  It  provides  that  the  commissioners 
may  classify  all  freights  into  either  of  the  general  or  special  classes, 
and  that  they  may  reduce  rates  on  any  of  said  classes.  The  commis- 
sioners have  finally,  under  the  advice  of  the  attorney-general,  exer- 
cised the  right  of  reducing  rates  on  any  class,  but  the  railroads  have 
never  fully  admitted  that  to  be  the  law.  Another  difficulty  has  been 
that  the  classification  itself  is  not  eifective.  Mr.  Pratt  says  : 

The  law,  in  making  those  classes  and  in  authorizing  the  distribution  of  freights  into 
those  classes,  makes  some  restrictions.  For  instance,  we  cannot  change  class  H, 
which  is  the  live-stock  class.  We  cannot  put  anything  into  it  or  take  anything  out  of 
it.  It  is  the  same  as  to  class  D,  which  is  the  grain  class.  'Then  there  are  two  other 
classes  which  we  are  forbidden  to  touch  at  all,  so  that  it  is  an  impossibility  under  our 
law  to  make  a  complete  and  perfect  classification  of  freights,  or  even  get  a  system  of 
rates.  In  that  respect,  then,  our  law  is  defective  in  regard  to  the  matter  of  rates, 
and  we  have  to  work  along  the  best  way  we  can.  We  have  succeeded  in  reducing 
rates  on  a  great  many  articles. 

The  commission  has  no  authority  to  enforce  its  rates  or  to  institute 
proceedings  for  that  purpose.  That  is  left  to  the  party  aggrieved. 
But  Mr.  Pratt  states  that,  as  a  general  rule,  the  companies  are  acqui- 
escing in  the  reduced  rates  fixed  by  the  commissioners,  who  have  been 
careful  never  to  require  a  reduction  unless  it  can  be  shown  to  be  en- 
tirely reasonable  and  equitable,  and  hence  their  decisions  have  come  to 
be  respected  and  conformed  to. 

MONTANA  TERRITORY. 

In  1873  the  Territory  of  Montana  provided  for  the  organization  of 
railroad  companies  under  a  general  act,  which  prohibits  exorbitant 
charges  and  unjust  discrimination,  and  the  giving  of  passes  to  any  mem- 
ber of  the  legislative,  executive,  or  judicial  department  of  the  Territory. 
The  act  also  requires  the  railroads  to  keep  posted  in  their  depots  sched- 
ules of  their  passenger  and  freight  tariffs,  and  makes  a  violation  of  this 
requirement  a  misdemeanor,  punishable  by  a  fine  of  $1,000  for  the  first 
conviction,  $2,000  for  the  second,  and  not  less  than  $5,000  nor  more 
than  810,000  for  further  violation.  The  companies  are  also  required  to 
make  annual  reports  to  the  auditor  of  the  Territory.  There  has  been 
no  other  regulative  railroad  legislation. 

NEBRASKA. 

The  constitution  of  Nebraska  (1875)  requires  railroads  to  make  an- 
nual reports  of  such  mat  ters  a.s  may  be  prescribed  by  law  to  the  auditoj 
8.  Kep.  40 8 


114  INTERSTATE    COMMEKCE. 

of  public  accounts,  and  to  maintain  stock  transfer  offices  in  the  State. 
Consolidation  with  parallel  or  competing  lines  is  prohibited,  and  no  con- 
solidations permitted  except  upon  sixty  days'  public  notice.  Railroads 
are  declared  public  highways  and  free  to  all  persons  for  the  transpor- 
tation of  their  persons  and  property  uuder  such  regulations  as  may  be 
prescribed  by  law.  The  legislature  is  authorized  to  pass  laws  establish- 
ing reasonable  maximum  rates  of  charges,  but  cannot  limit  the  liability 
of  railroad  corporations  as  common  carriers.  The  fictitious  increase  of 
capital  stock  or  bonds  is  prohibited  and  declared  void,  and  no  increase 
of  capital  stock  is  permitted  except  after  sixty  days'  public  notice.  The 
legislature  is  required  to  pass  laws  to  correct  abuses  and  to  prevent 
unjust  discrimination  and  extortion  in  all  charges  of  express,  telegraph, 
and  railroad  corporations,  and  to  enforce  such  laws  by  adequate  penal- 
ties to  the  extent,  if  necessary,  of  forfeiture  of  their  property  and  fran- 
chises. 

The  first  statute  enacted  in  compliance  with  the  requirements  of  the 
constitution  was  the  "  Doane  law,"  passed  in  1881,  although  at  every 
biennial  session  for  eight  years  there  had  been  a  great  struggle  over 
railroad  legislation.  This  act  provides  that  every  railroad  corporation 
shall  give  all  persons  reasonable  and  equal  terms,  facilities,  and  accom- 
modations for  the  transportation  of  any  merchandise  or  any  other 
property  within  the  State,  and  for  terminal  handling  the  use  of  depot 
and  other  buildings  and  grounds,  and  at  any  point  where  it  connects 
with  any  other  railroad  reasonable  and  equal  terms  and  facilities  of 
interchange,  and  that  it  shall  promptly  forward  freight  to  be  sent 
over  another  connecting  road  according  to  directions.  The  act  also 
provided  that  thereafter  no  company  should  charge  a  higher  rate  than 
was  charged  on  November  1,  1880,  as  shown  by  its  published  tariff", 
nor  charge  for  any  specific  distance  a  greater  sum  than  for  a  greater 
distance.  It  also  prohibited  the  allowance  of  any  secret  rate,  rebate, 
drawback,  or  unreasonable  allowance  for  the  use  of  cars  or  any  undue 
advantage  whatever,  and  the  charging  of  any  person  any  greater  or  less 
sum  than  is  charged  others 'for  "like  and  contemporaneous  service  in 
the  receiving,  transporting,  storing,  delivery,  or  handling  of  freights." 
The  penalty  for  violation  of  the  act,  in  addition  to  liability  for  all  dam- 
ages sustained,  is  $500.  For  failing  to  maintain  public  stock  transfer 
offices  or  to  make  annual  reports  a  railroad  forfeits  all  right  to  do  busi- 
ness in  the  State,  and  any  court  may  on  application  of  any  person  ap- 
point a  receiver  and  wind  up  its  business.  Its  principal  officers  in  ad- 
dition are  made  subject  to  a  fine  not  exceeding  $1,000  or  imprisonment 
not  exceeding  three  years. 

It  appears  from  the  evidence  of  the  witnesses  examircd  by  the  com- 
mittee at  Omaha  that  this  law  has  not  been  self-enforcing.  Its  pur- 
pose was  to  prevent  unjust  discrimination  and  extortion,  but  it  made 
no  special  provision  for  its  enforcement,  except  that  persons  aggrieved 
might  go  to  the  courts ;  and,  despite  the  strong  feeling  on  the  subject 
known  to  exist  in  Xebraska,  no  suits  appear  to  have  been  instituted 
under  this  law.  The  reason  assigned  by  Mr.  Gere  was — 

That  the  individual  injured  by  the  railroad  generally  suffered  only  a  few  dollars. 
He  might  have  a  just  cause  of  complaint,  but  it  would  not  pay  him  to  hire  a  lawyer 
and  go.  into  court.  In  case  he  got  a  judgment  the  case  would  probably  be  appealed, 
and  a  man  would  be  worn  out.  For  that  reason  a  feeling  has  been  growing  up  ia  the 
State  for  some  time  in  favor  of  further  remedy ;  that  is,  for  the  establishment  of 
some  sort  of  authority  that  would  relieve  the  individual  complainant,  the  man  who 
suffers  injustice  from  the  hands  of  the  railroad,  from  the  necessity  of  himself  making 
all  the  light.  (Testimony,  p.  115G.) 


INTERSTATE    COMMERCE.  115 

Mr.  Edward  Eosewater  attributed  the  failure  of  the  law  to  become 
operative  largely  to  the  policy  adopted  by  the  railroads  of  making  it 
unpopular  by  living  up  to  its  strict  letter,  although  be  had  succeeded 
in  enforcing  it  in  his  own  business.  He  stated  that  the  railroads  con- 
strued the  short-haul  provision  in  a  very  exact  way  and  raised  their 
rates  in  far  western  localities,  so  that  the  people  there  found  the  law  a 
burden,  not  a  relief,  and  that  the  companies  had  contrived  to  create  a 
general  distrust  and  a  general  dissatisfaction,  until  the  situation  was 
such  that  the  law  could  be  ignored.  (Testimony,  p.  1133.) 

Upon  this  subject  the  special  committee  appointed  by  the  legislature 
of  1 883  said  in  its  report : 

Your  committee  also  finds  that  the  railroad  companies  of  the  State,  while  profess- 
ing to  obey  the  law  generally  known  as  the  Doaue  law,  have,  by  a  change  in  the  classi- 
fication of  freights-,  evaded  the  true  and  just  meaning  of  the  said  law,  and  while  do- 
ing this,  have  continually,  by  their  officers  and  agents,  endeavored  to  prejudice  the 
business  men  of  the  State  against  said  law  as  the  cause  of  higher  freights  in  the  State, 
when  really  the  cause  of  such  higher  rates  was  a  change  in  the  classification  of  freights 
made  by  these  companies  apparently  for  the  very  purpose  of  evading  the  law. 

This  committee  recommended  the  establishment  of  a  commission  and 
closed  its  report  with  the  following  statement : 

We  further  report  that  it  is  our  firm  conviction  that  through  Congress  alone  can 
the  people  receive  complete  relief;  and  we  earnestly  appeal  that  their  power  be  in- 
voked to  the  work  of  removing  every  barrier,  to  the  end  that  justice  may  be  done  to 
the  most  humble  citizen  on  perfect  equality  with  the  most  exalted  in  every  respect, 
as  relates  to  the  benefits  that  may  be  derived  from  the  existence  and  operation  of 
these  public  highways. 

At  that  session  of  the  legislature  an  opinion  was  obtained  from  the 
supreme  court  that  the  creation  of  a  commission  similar  to  those  of 
other  States  would  be  unconstitutional,  because  the  Constitution  pro- 
hibited the  creation  of  additional  State  offices,  and  required  that  any 
further  executive  duties  or  power  should  be  devolved  upon  the  existing 
State  officers,  but  that  it  would  be  constitutional  to  give  State  officers 
the  powers  sought  to  be  conferred  upon  a  commission.  Nothing  was 
done,  however,  except  to  submit  to  the  people  a  constitutional  amend- 
ment providing  for  the  election  of  a  commission.  This  was  rejected  by 
the  people,  but  the  last  legislature,  elected  at  the  same  time,  created  a 
commission,  as  suggested  by  the  supreme  court,  composed  of  the  at- 
torney-general, secretary  of  state,  and  auditor,  giving  each  power  to 
appoint  a  secretary,  and  authorizing  the  secretaries  to  perform  any  of 
the  duties  assigned  to  the  members  of  the  board,  except  the  making  of 
a  final  determination  on  questions  where  an  issue  is  raised  between  a 
complaining  party  and  a  railroad.  This  law  went  into  effect  on  June  G 
last,  and  it  is  too  soon  to  judge  of  its  results.  In  its  general  provisions 
it  is  substantially  the  same  as  the  law  in  force  in  Iowa,  and  is  supple- 
mentary to  the  "  Doane  law,"  which  is  still  in  force. 

NEVADA. 

The  general  act  for  the  incorporation  of  railroad  companies  enacted 
by  the  legislature  of  Nevada  in  18G5  limited  their  charges  to  10  cents 
per  mile  per  passenger  ami  to  -0  cents  per  mile  for  each  ton  of  freight. 
An  .act  approved  February  li',  1870,  makes  it  unlawful  for  railroads  to 
discriminate  in  their  charges  for  "like  and  contemporaneous  service," 
or  in  the  facilities  furnished,  within  the  State;  to  allow  rebates  or  draw- 
backs; to  make  combinations  or  contracts  to  prevent  continuous  car- 


116  INTERSTATE    COMMERCE. 

riage,  or  to  pool  or  divide  business  or  earnings.  The  railroads  are  re- 
quired to  keep  posted  in  their  stations  schedules  showing  their  rates  for 
all  classes  of  service,  and  cannot  change  such  rates  except  by  substi- 
tuting a  similar  schedule  five  days  before  it  goes  into  effect.  The  act 
also  makes  it  unlawful  to  charge  more  or  less  than  the  rates  thus 
posted,  and  allows  triple  damages  to  persons  injured  by  any  violation 
of  this  provision,  to  be  recovered  by  suit  in  any  district  court.  In  ad- 
dition there  is  a  penalty  for  violation  in  the  shape  of  a  fine  of  not  less 
than  $2,000,  to  be  recovered  by  the  State,  one-half  of  which  is  to  be 
paid  tp  the  informer.  Eeduced  rates  may,  however,  be  given  on  freight 
carried  for  the  United  States  and  articles  carried  for  charitable  pur- 
poses or  to  public  fairs,  and  on  materials  carried  for  the  construction  of 
other  railroads.  At  the  same  session  the  short-haul  clause  of  this  act 
was  amended  so  as  to  make  it  unlawful  for  a  railroad  "  to  charge  or  re- 
ceive any  greater  compensation  per  car-load,  or  part  thereof,  of  similar 
property,  for  carrying,  receiving,  storiug,  forwarding,  or  handling  the 
same  for  a  shorter  than  for  a  longer  distance  in  one  continuous  car- 
riage." As  first  enacted  this  section  would  have  required  equal  mile- 
age rates. 

The  committee  did  not  have  access  to  the  session  laws  of  1881,  but, 
unless  some  changes  were  made  that  year,  that  which  has  been  out- 
lined includes  all  the  railroad  legislation  of  Nevad-a  down  to  the  pres- 
ent time. 

NEW  HAMPSHIRE. 

The  New  Hampshire  Commission  has  been  in  existence  since  1844. 
In  organization  and  authority  it  resembled  the  other  New  England  com- 
missions, and  was  limited  to  inspection  duties  until  two  years  ago,  when 
the  law  was  radically  changed,  and  it  was  made  the  only  commission  in 
an  Eastern  State  having  power  to  establish  rates. 

The  general  railroad  law  of  the  State  provides  that  in  every  year 
when  the  average  net  receipts  of  a  railroad  exceed  the  average  of  10  per- 
cent, "over  its  expenditures  from  the  commencement  of  its  operations, 
the  excess  shall  be  paid  into  the  State  treasury.  The  consolidation  of 
rival  and  competing  lines  is  prohibited.  Kates  must  be  posted  at  all 
stations,  and  cannot  be  raised  except  after  thirty  days'  notice  by  posting. 
The  giving  of  free  passes  is  prohibited,  except  as  indicated  in  the  fol- 
lowing section : 

No  persoii  shall  be  allowed  to  pass  over  any  railroad  without  paying  the  faiv  » 1ms 
established,  except  stockholders  going  or  returning  from  the  meetings  of  the  proprie- 
tors ;  the  directors,  superintendent,  treasurer,  and  clerk  of  said  proprietors,  and  of 
roads  having  a  business  connection  from  freight  and  passengers  on  said  road  ;  persons 
in  charge  of  mails  and  expresses;  and  persons  poor  and  in  misfortune,  who  are  unable 
to  pay  said  fare,  and  to  whom  passes  have  been  granted. 

A  "short-haul"  law  was  enacted  in  July,  1879,  which  provides  that — 

No  railroad  owned  or  operated  in  this  State  shall  charge  a  higher  tariff  on  like 
classes  of  freight,  by  the  car-load,  when  delivered  at  any  station  on  its  line,  than  is 
charged  to  deliver  the  same  at  any  station  on  the  road  when  the  transportation  is  for 
a  greater  distance. 

SEC.  2.  Nothing  in  section  1  shall  be  so  construed  as  to  affect  the  rights  of  any  rail, 
road  owned  or  operated  in  this  State  from  establishing  such  rates  on  freights  shipped 
over  tlieir  lines  from  points  outside  of  the  State  to  points  beyond  the  State  as  may 
seem  for  their  best  interests. 

SEC.  3.  Any  railroad  corporation  or  company  violating  any  of  the  provisions  of  this 
act  shall  be  fined  not  exceeding  $500,  to  be  recovered  in  an  action  of  debt  by  the  party 
aggrieved,  or  any  person  who  may  sue  therefor. 


INTERSTATE    COMMERCE.  117 

The  general  railroad  incorporation  law,  passed  in  1883,  contains  a 
-"short-haul"  provision  identical  in  terms  with  the  law  of  Connecticut 
on  the  subject.  The  commission  act  of  1883  provides  for  the  appoint 
merit  by  the  governor  of  three  railroad  commissioners,  for  terms  of  three 
years.  The  expenses  of  the  board  are  assessed  upon  the  railroads  of 
the  State  in  proportion  to  their  receipts.  The  board  is  given  general 
supervision  of  all  railroads  and  required  to  keep  itself  informed  as  t<> 
their  condition,  the  manner  in  which  they  are  operated,  and  the  com- 
pliance of  the  corporations  with  the  laws.  It  is  made  the  duty  of  the 
commissioners  to  iix  maximum  freight  and  passenger  rates  and  to  change 
the  same  as  the  public  good  may  require.  In  case  of  any  neglect  or 
violation  of  the  laws,  the  board  must  notify  the  corporation  in  writing; 
and,  if  continued  after  notice,  present  the  facts  to  the  attorney-general ; 
but  the  commissioners  may,  when  the  public  good  requires,  themselves 
institute  proceedings.  The  board  is  required  to  investigate  the  condi 
tion  and  operation  of  any  railroad  on  complaint  of  the  mayor  and  alder- 
men of  a  city  ot  the  selectmen  of  a  town,  and  notify  the  corporation  of 
its  adjudication.  Ample  provision  is  made  for  the  examination  of  wit 
nesses,  books  and  papers,  and  the  procuring  of  information  from  the 
roads. 

In  the  performance  of  its  duty  of  fixing  maximum  rates  the  board 
held  public  hearings  and  called  for  complaints.  It  appears  from  the  re 
port  of  the  Commission  for  1885,  the  second  under  the  new  law,  tha; 
substantially  no  complaints  were  made,  and  that  the  rates  complained 
of  in  three  or  four  instances  were  at  once  satisfactorily  adjusted  by  the 
roads.  The  result  was  that  the  board  established  the  existing  rates  as 
the  maximum  "until  further  investigation  or  complaint  preferred  sus- 
tains the  advisability  of  a  reduction."  Of  their  action  the  commissioners 
say: 

The  maximum  passenger  and  freight  rates  of  the  several  roads,  as  established  by 
this  hoard,  are  now  on  file  in  this  office,  and  can  be  consulted  at  any  time.  By  law 
these  rates  are  required  to  be  printed  and  posted  in  the  several  stations.  It  will  bo 
observed  that  the  maximum  rates  fixed  by  this  board  are  subject  to  such  chungr.- 
"from  time  to  time  as  in  the  judgment  of  the  board  the  public  good  may  require." 
If  any  citizen  feels  that  rates  are  excessive,  he  has  only  to  state  his  case  by  a  com- 
munication to  the  board  to  that  effect,  a  day  for  its  public  consideration  will  be 
named,  and  the  matter  will  receive  full  and  impartial  treatment.  With  this  remedy 
for  any  excessive  rate  or  charge,  any  citizen  can,  under  the  present  law,  "obtain 
right  and  justice  freely,  without  being  obliged  to  purchase  it,  completely  and  without 
any  denial,  promptly  and  without  any  delay,  conformably  to  the  laws."  Speculation 
whether  such  a  law  is  better  or  worse  than  another  is  of  small  moment  in  the  face  of 
an  experiment  that  has  already  conferred  some  benefits,  which  promises  to  confer 
more,  and  will  at  least  shut  out  any  palpable  injustice. 

The  maximum  passenger  rates  thus  fixed  by  the  board  vary  from  2£ 
cents  per  mile  upon  one  road  to  15  cents  per  mile  upon  a  mountain 
road  and  $1  per  mile  upon  the  steep  road  up  Mount  Washington,  ?, 
miles  in  length.  Upon  the  question  of  uniform  rates,  the  commission- 
ers say : 

The  argument  for  a  uniform  rate  would  be  conclusive  if  the  conditions  under  which 
all  railroads  in  the  State  were  constructed  and  operated  were  the  same.  The  conditions 
aro  so  unlike  in  several  vital  respects  that  uniformity  would  be  rank  injustice.  Thin 
does  not  preclude  the  idea  that  the  people  of  one  section  of  the  State  have  a  natural 
right  to  equal  advantages  with  the  people  of  another  section.  So  they  have,  so  faras 
their  natural  and  legal  rights  are  concerned,  but  artificial  advantages  are  subject  to  no 


118  INTERSTATE    COMMERCE. 

such  rnle.  A  road  with  low  grades  and  low  cost  of  construction,  snperaddefl  to  easy 
operation  and  a  lucrative  traffic,  can  afford  rates  (hat  would  send  into  immediate 
l>iinkrii])tcy  a  road  of  heavy  grades  and  high  cost  of  constrnction  running  through  a 
poorand  sparsely-settled  region.  It  is  simply  absurd  to  say  that  the  Portland  andOg- 
densbnrg  road,  which  is  in  the  hands  of  a  receiver,  whose  cost  of  eoi;stniftion  was 
(47,079.48  .per  mile,  and  of  expense  to  gross  earnings  is  114. f>0  per  ceni.,  should  have, 
the  same  rates  as  the  Concord  Railroad,  which  never  had  a  dollar  of  bonded  indebt- 
edness, which  cost  only  $40,507.69  per  mile,  and  whose,  operating  expenses  are  only 
r»7.s-^  per  cent,  of  its  income.  It  is  equally  absurd  to  put  almost  any  two  roads  of 
the  State  ni)on  a  like  basis  for  determining  maximum  fares  and  freights.  One  rofld, 
by  the  exercise  of  severe  economy,  is  able  1o  declare  '•>  per  cent,  dividends;  another 
road,  by  the  exercise  of  ordinary  prudence,  can  declare  C>,  *,  or  10  per  cent,  dividends. 
The  first  conclusion  reached  was  that  each  road's  circumstances  should  determine 
the  maximum  rates  for  that  road. 

NEW  MEXICO. 

The  legislation  of  the  Territory  of  New  Mexico  in  relation  to  the 
incorporation  of  railroad  companies  and  matters  pertaining*  to  the  con- 
duct of  their  business  as  corporations  is  very  complete.  Annual  re- 
ports to  the  secretary  of  the  Territory  are  required.  Some  years  ago  a 
provision  was  incorporated  into  the  general  law  limiting  passenger 
fares  to  10  cents  per  mile  and  freight  charges  to  15  cents  per  mile  per 
2,000  pounds  or  per  40  cubic  feet.  This  was  amended  in  1882  so  as  to 
limit  passenger  fares  to  6  cents  per  mile  and  to  3  cents  for  children  be- 
tween twelve  and  six  years  of  age,  giving  the  person  charged  more 
than  these  rates  the  right  to  recover  a  penalty  of  $500. 

NEW  JERSEY. 

In  1873  the  legislature  of  New  Jersey  provided  for  the  appointment 
annually  by  the  governor  of  a  "commissioner  of  railroad  taxation,"  to 
make  an  annual  statement  and  valuation  of  the  railroad  property  of 
the  State  for  purposes  of  taxation.  This  officer  with  the  comptroller 
and  treasurer  constituted  the  board  of  railroad  commissioners,  whose 
only  duty  was  to  estimate  the  value  of  railroad  property  for  taxation 
when  the  companies  failed  to  make  returns.  In  1884  a  new  method  for 
the  taxation  of  railroad  property  was  adopted,  which  provided  for  the 
appointment  by  the  governor  of  a  State  board  of  assessors  and  which 
abolished  the  former  system. 

The  general  railroad  incorporation  law  of  1873  prohibited  the  charg- 
ing of  a  greater  sum  for  the  transportation  of  freight  between  way  sta- 
tions or  between  a  terminal  and  a  way  station  than  between  terminal 
stations,  limited  passenger  fares  to  3  cents  per  mile,  and  required  the 
roads  to  make  annual  reports  to  the  legislature. 

NORTH  CAROLINA. 

The  lews  of  North  Carolina  limit  passenger  rates  on  railroads  to  5 
cents  per  mile.  The  general  assembly  may  at  any  time  alter  or  re- 
duce the  rates  of  freight  and  fare  charged,  but  the  same  shall  not,  with- 
out the  consent  of  the  corporation,  be  so  reduced  as  to  reduce  its  profits 
to  less  than  6  per  cent,  per  annum  upon  the  capital  actually  expended, 
or  unless  the  company's  income  has  been  found  by  investigation  to  have 
exceeded  such  a  percentage  during  the  previous  year.  The  railroads 
are  required  to  make  annual  reports  to  the  governor,  and.  to  keep 


INTERSTATE    COMMERCE.  119 

posted  in  their  depots  a  list. of  their  freight  charges,  which  cannot  be 
increased  without  fifteen  days'  public  notice.  Discriminations  in  rates 
are  prohibited  under  a  penalty  of  si'OO  for  each  offense,  recoverable  by 
the  person  suing  for  the  same,  but  special  contracts  can  be  made  on 
freight  shipped  in  car-load  lots.  Pooling  and  the  giving  of  rebates  are 
prohibited  under  penalty  of  a  fine  of  not  less  than  $1,000  or  imprison- 
ment for  not  less  than  twelve  months,  to  which  all  persons  concerned, 
railroad  officials  and  others,  are  liable.  The  Attorney-General  is  re- 
quired to  institute  proceedings  when  contracts  are  made  by  railroads 
giving  any  person  or  company  preferences  or  exclusive  privileges.  The 
companies  are  prohibited  from  loading  or  unloading  freight  trains  on 
Sunday,  or  from  running  any  trains  on  that  day,  except  to  carry  passen- 
gers and  the  mails.  Xo  bill  to  incorporate  a  railroad  company  or  change 
the  charter  of  one  can  be  offered  in  the  legislature  unless  accompanied 
by  a  receipt  from  the  State  treasurer  for  $250,  the  sums  thus  received 
being  paid  into  the  school  fund. 

OHIO. 

The  first  of  the  State  commissioners  to  come  into  public  notice  was 
that  of  Ohio,  in  which  State-  the  office  of  railroad  commissioner  was 
created  by  an  act  passed  in  1867.  The  office  was  held  for  several  years 
by  General  George  B.  Wright,  whose  investigations  and  reports  upon 
matters  of  public  interest  attracted  attention  among  those  interested  in 
railroads  and  railroad  regulation,  and  whose  statement  to  this  commit- 
tee appears  in  the  Appendix,  page  84.  Tinder  the  statutes,  the  com- 
missioner is  appointed  by  the  governor  for  a  term  of  two  years,  and  his 
title  is  the  "  Commissioner  of  Railroads  and  Telegraphs."  He  is  re- 
quired to  inspect  the  condition  of  the  railroads  and  require  needed  re- 
pairs to  be  made  or  necessary  precautions  for  safety  to  be  taken,  and 
also  to  inquire  into  any  alleged  violation  of  law  by  the  roads.  Annual 
reports  are  required  in  detail,  and  the  roads  are  required  to  furnish  the 
commissioner,  on  demand,  with  copies  of  all  leases,  contracts,  and  agree- 
ments with  other  companies.  He  is  also  to  be  notified  of  all  fatal  acci- 
dents, and  may  examine  into  the  causes  of  the  same.  Under  this  sys- 
tem the  physical  condition  of  the  roads  is  annually  examined  very 
thoroughly  by  experts  and  reported  upon  at  length  and  with  minute 
detail,  and  the  returns  received  from  the  roads  are  very  complete  and 
voluminous,  but  this  is  practically  the  extent  of  the  work  of  the  com- 
missioner. 

In  1873  a  statute  was  passed  fixing  the  maximum  freight  rate  at  5 
cents  per  ton  per  mile  for  distances  of  30  miles  or  more,  and  prohibit- 
ing a  greater  charge  on  freight  of  the  same  class  for  a  short  haul  than 
for  a  longer  haul  in  the  same  direction  over  the  same  railroad  or  con- 
necting lines.  This  statute  does  not  appear  to  have  been  enforced,  and 
the  commissioner  is  not  authorized  to  prosecute  proceedings  for  its  vio- 
lation. 

OREGON,     t 

At  its  last  session  the  legislative  assembly  of  Oregon  passed  an  act 
known  afc  the  "lloult  railroad  law,"  which  was  approved  February  20, 
1SS5,  and  which  was  substantially  a  copy  of  the  "Reagan  bill."  Before 
it  took  effect,  Richard  Koehler,  the  receiver  of  the  Oregon  and  Califor- 
nia Railway  Company,  presented  a  petition  to  the  United  States  circuit 
court  tor  the  district  of  Oregon,  which  was  in  charge  of  the  road, -ask- 
ing for  instructions  concerning  his  duty  in  the  management  of  the  prop- 


120  INTERSTATE    COMMERCE. 

crty  in  certain  particulars  affected  by  the  act.  In  his  opinion,  as  re- 
ported in  full  in  the  Portland  Oregonian  of  May  5,  1885,  Judge  Deady 
directed  the  receiver  to  comply  with  the  act  so  far  as  practicable,  but 
not  to  regard  the  short-haul  provision  when  it  interfered  with  rates 
affected  by  water  competition.  This  part  of  the  decision  bears  so 
directly  upon  the  subjects  under  consideration  by  the  committee  that 
the  greater  part  of  it  is  herewith  reproduced.  After  reciting  the  facts 
already  stated,  Judge  Deady  says : 

The  act  is  very  verbose  and  uuskillfully  drawn,  but  so  f;ir  as  it  relates  to  the  mat- 
ters abont  which  the  receiver  seeks  direction,  it  may  be  briefly  stated  as  follows : 

(1)  The  fare  for  the  transportation  of  passengers  shall  in  no  case  exceed  4  cents  a, 
mile. 

(2)  All  charges  for  transporting   property    shall    be  reasonable ;    but  the    rate 
charged  on  January  1,  1885,  by  any  corporation  shall  be  its  maximum  rate. 

(3)  No  "  greater  or  less  "  compensation  shall  be  charged  one  person  than  another 
"  for  like  and  contemporaeous  service  "  in  transporting  property. 

(4)  No  rebate  or  drawback  shall  be  allowed  in  any  case,  except  when  property  is 
shipped  for  points  beyond  the  limits  of  the  State. 

(5)  Pooling  freight  or  dividing  the  earnings  of  "  different  and  competing  "  railways 
is  prohibited. 

(6)  No  greater  rate  shall  be  charged  for  carrying  similar  property  a  short  haul  than 
a  long  one,  in  the  same  direction. 

Any  person  who  violates  any  provision  of  the  act  is  made  liable  to  the  person  iu- 
j  ured  in  treble  damages  and  a  fine  of  $1,000. 

The  court  next  considers  the  question  raised  as  to  the  unconstitution- 
ality  of  the  act,  so  far  as  it  undertakes  to  fix  charges,  and  says  : 

Admitting,  then,  that  the  legislative  assembly  has  the  power  to  prescribe  a  maxi- 
mum rate  for  the  carriage  of  persons  arid  property,  and  that  such  rate  is  presumed  to 
be  reasonable  until  the  contrary  is  shown,  I  proceed  briefly  to  consider  the  matters 
concerning  which  the  receiver  desires  instruction. 

And,  first,  as  to  the  provision  fixing  the  rates  for  carrying  passengers. 

There  is  no  sufficient  showing  that  the  rate  prescribed  is  not  reasonable.  The  only 
distinct  allegation  in  the  petition  to  the  contrary  is  that  "the  actual  cost"  of  carry- 
ing "passengers  on  many  portions  of  the  road  is  in  excess  of  the  maximum  rates  al- 
lowed" therefor.  But  what  the  effect  is  upon  the  receipts  for  passenger  traffic  on  tho 
road  as  a  whole  does  not  appear,  and  probably  cannot  be  definitely  ascertained  ex- 
cept by  experience. 

It  is  commonly  understood  that  now  and  prior  to  the  passage  of  the  act  the  fare 
between  Portland  and  Albany,  Lebanon  and  Corvallis,  was  4J  cents  a  mile ;  between 
Albany  and  Roseburg,  6  cents ;  and  between  Rosebnrg  and  AshTand,  7  cents ;  and 
on  mileage  tickets  between  Portland  and  Oregon  City,  2  cents  a  mile ;  between  Port- 
land and  Albany  and  Lebanon,  3  cents;  and  all  other  points  4  cents  a  mile. 

Owing  to  the  increased  cost  of  operation  and  the  limited  population  and  travel  it 
is  probably  true  that  a  rate  which  would  be  reasonable  in  the  Willamette  V alley 
would  not  pay  expenses  to  the  south  of  it.  But  if  the  legislature,  in  fixing  the  rate, 
think  proper  to  make  it  uniform  owr  the  whole  line,  so  as  to  make  the  more  wealthy 
and  populous  portion  of  the  State  contribute  to  the  locomotion  of  the  inhabitants  of 
the  southern  portion  thereof,  I  am  not  prepared  to  say  it  has  not  the  powe»to  do  so, 
or  that  the  corporation  can  be  heard  to  object  thereto,  so  long  at  least  as  the  com- 
pensation received  by  it  for  the  carriage  of  passengers  over  its  road  as  a  whole  is 
reasonable. 

While  the  road  remains  in  the  hands  of  a  receiver  of  this  court  it  is  not  desirable 
that  there  should  bo  any  conflict  between  its  management  and  tho  policy  of  the  State, 
except  when  the  latter  is  clearly  contrary  to  the  legal  right  and  substantial  interest 
of  the  road. 


INTERSTATE    COMMERCE.  121 

For  the  present  the  receiver  will  be  instructed  to  operate  the  road  in  this  respect 
insubordination  to  the  act,  and  if  experience  shall  prove  that  the  rate  is  insufficient 
to  yield  the  road  as  a  whole  a  reasonable  compensation,  the  matter  may  be  further 
considered. 

As  to  the  matter  of  long  and  short  hauls,  the  question,  although  pr'una  fade  one  of 
discrimination,  directly  involves  the  right  to  a  reasonable  compensation. 

I  assume  that  the  State  has  the  power  to  prevent  a  railway  company  from  discrimi- 
nating between  persons  and  places  for  the  sake  of  putting  one  up  or  another  down,  or 
any  other  reason  than  the  real  exigencies  of  its  business.  Such  discrimination,  it 
seems  to  me.  is  a  wanton  injustice,  and  may  therefore  be  prohibited.  It  violates  the 
fundamental  maxim,  which  in  effect  forbids  any  one  to  so  use  his  property  as  to  injure 
another — sic  vtcre  tuo  ut  alien-urn  non  Icedas. 

The  provisions  of  the  act  that  I  have  condensed  in  paragraphs  3, 4,  and  6  aforesaid, 
an-  intended  to  prevent  this  practice. 

But  where  the  discrimination  is  between  places  only  and  is  the  result  of  competi- 
tion with  other  lines  or  means  of  transportation,  the  cas^e,  I  think,  is  different.  For 
instance,  the  act  prescribes  a  reasonable  rate  for  carrying  freight  between  Corvallis 
and  Portland,  or  from  either  to  points  intermediate  thereto.  But  Corvallis  is  on  the 
river,  and  has  the  advantage  of  water  transportation  for  some  months  in  the  year. 
The  carriage  of  goods  by  water  usually  costs  less  than  by  land,  and  as  water  craft  are 
allowed  to  carry  at  a  rate  less  than  the  maximum  fixed  for  the  railway,  they  will  get 
.-ill  the  freight  from  this  point  unless  the  latter  is  allowed  to  compete  for  it.  But  if, 
to  do  this,  it  must  adopt  the  water  rate  for  all  the  points  intermediate  between  Port- 
land and  Corvallis.  where  there  is  no  such  competition,  it  isin  effect  required  to  carry 
freight  to  and  from  such  points  at  a  less  rate  than  that  which  the  legislature  has  de- 
clared to  be  reasonable,  or  else  give  up  the  business  at  Corvallis  altogether.  And  the 
same  result  would  follow  as  to  Salem  and  other  points  on  the  east  and  west  side  lines, 
where  there  is  convenient  access  to  water  transportation. 

If  the  legislature  cannot  require  a  railway  corporation  formed  under  the  laws  of 
the  State  to  carry  freight  for  nothing,  or  at  any  less  rate  than  a  reasonable  one,  then 
it  necessarily  follows  that  this  provision  of  the  act  cannot  be  enforced  so  far  as  to 
prevent  the  railway  from  competing  with  the  water  craft  at  Corvallis  and  other  simi- 
larly situated  points,  even  if  in  so  doing  they  are  compelled  to  charge  less  for  a  long 
haul  than  a  short  one  in  the  same  direction . 

It  is  not  the  fault  or  contrivance  of  the  railway  that  compels  this  discrimination, 
but  it  is  the  necessary  result  of  circumstances  altogether  beyond  its  control.  It  is 
not  done  wantonly  for  the  purpose  of  putting  the  one  place  up  or  the  other  down,  but 
only  to  maintain  its  business  against  rival  and  competing  lines  of  transportation.  In 
other  words,  the  matter,  so  far  as  the  railway  is  concerned,  resolves  itself  into  a  choice 
of  evils.  It  must  either  compete  with  the  boats  during  the  season  of  water  transpor- 
tation, and  carry  freight  below  what  the  legislature  has  declared  to  be  a  reasonable 
rate,  or  abandon  the  field  and  let  its  road  go  to  rust. 

Nor  can  the  shipper  at  the  non-competing  point  or  over  the  short  haul  complain,  so 
long  as  his  goods  are  carried  at  a  reasonable  rate.  It  is  not  the  fault  of  the  railway 
that  the  shipper  who  does  business  at  a  competing  point  has  the  advantage  of  him. 
-It  is  a  natural  advantage  which  he  must  submit  to,  unless  the  legislature  will  under- 
take to  equalize  the  matter  by  prohibiting  the  carriage  of  goods  by  water  for  a  less 
rate  than  by  rail.  And  when  this  is  done,  the  inequalities  of  distance  as  well  as  place 
may  also  be  overcome  by  requiring  goods  to  pay  the  same  rate  over  a  short  haul  as  a 
long  one,  and  then  the  shipper  at  Ashland  will  be  as  near  the  market  as  any  one. 

As  to  the  interchange  of  freights  with  the  Oregonian  Railway  Company,  the  case 
stated  in  the  petition  does  not  seem  to  be  one  of  pooling  freights  or  dividing  earn- 
ings, but  rather  a  case  of  a  long  haul  at  a  less  rate  than  a  short  one  in  the  same  direc- 
tion, to  meet  the  contingency  of  river  competition  at  Ray's  or  Fulquartz's  landing. 

Pooling  freights  or  dividing  earnings  is  resorted  to  by  rival  and  competing  lines  of 


122  INTERSTATE    COMMERCE. 

railway  as  a  means  of  avoiding  the  cutting  of  rates,  which,  if  persisted  in,  must  re- 
sult in  corporate  suicide.  It  is  not  apparent  how  a  division  of  the  earnings  of  two 
such  roads  can  concern  or  affect  the  public  so  long  as  the  rate  of  transportation  on 
them  is  reasonable.  But  assuming  what  is  not  admitted,  that  the  legislature  has  the 
power  to  prohibit  the  practice,  the  Oregon  and  California  and  the  Oregonian  Rail- 
ways do  not  appear  to  be  competing  ones,  but  rather  supporting  ones,  the  latter  serv- 
ing as  a  feeder,  branch,  or  continuation  of  the  former.  Nor  is  the  arrangement  be- 
tween them  a  pooling  one,  but  simply  one  by  which  each  cart-ies  for  the  other  nt  a 
fixed  price  per  ton  per  mile. 

There  is  nothing  in  the  arrangement  which  prevents  the  receiver  from  doing  a  "  like 
service  "  for  any  one  else  on  the  same  terms,  and  I  have  no  doubt  he  would  be  glad  to. 

The  receiver  is  instructed — 

(1)  To  carry  passengers  at  a  rate  not  exceeding  4  cents  a  mile  on  any  portion  of 
the  road  and  for  as  much  less  on  the  whole  or  any  part  thereof  as  he  may  think  ad- 
visable. 

(2)  To  charge  no  more  for  the  carriage  of  goods  than  the  maximum  allowed  by  the 
act,  nor  no  more  for  a  short  haul  than  a  long  one  in  the  same  direction,  except  to  and 
from  points  where  the  rate  obtainable  is  affected  by  water  transportation,  in  which 
case  he  may  carry  at  as  low  a  rate  as  the  water-craft  do,  without  reference  to  the 
length  of  the  haul. 

(3)  To  continue  the  interchange  of  freight  with  the  Oregonian  Railway  on  the  foot- 
ing of  the  present  arrangement  as  long  as  he  may  think  advisable ;  and, 

(4)  In  the  discharge  of  his  duties,  to  otherwise  obey  and  conform  to  the  provisions 
of  the  act. 

The  foregoing  contains  my  present  impression  of  the  rights  and  duties  of  the  re- 
ceiver in  the  premises.  But  being  «r  parte,  of  course  it  is  given  subject  to  further 
consideration  and  correction.  The  receiver  is  instructed  to  obey  the  act  for  the  time 
being,  except  in  the  case  of  a  long  haul  to  or  from  a  point  affected  by  water  transpor- 
tation. If  any  one  considers  himself  aggrieved  by  the  action  of  the  receiver  in  thi* 
particular,  on  application  to  this  court  leave  will  be  given  to  bring  an  action  herein 
against  him  for  damages,  so  that  the  matter  may  be  regularly  and  formally  heard  and 
determined. 

As  the  question  involved — "Has  the  corporation  a  contract  with  the  State  for  the 
right  to  demand  and  have  a  reasonable  compensation  for  the  carriage  of  goods?" — is 
a  Federal  one,  it  is  proper  that  the  action  should  be  brought  in  this  court. 

PENNSYLVANIA. 

The  status  of  railroad  legislation  in  Pennsylvania  is  exhibited  in  the 
following  extracts  from  the  annual  report  of  the  secretary  of  internal 
affairs,  dated  February  15,  1884 : 

Pennsylvania  was  among  the  earliest  of  the  American  States  to  encourage  and  assist 
in  the  construction  of  internal  improvements.  The  Indian  trails  of  a  century  ago, 
that  passed  along  the  valleys  and  through  the  water-gaps,  have  been  succeeded  by 
lines  of  turnpike-roads,  canals,  railroads,  telegraphs,  and  telephones.  Streams  were 
slack-watered  or  spanned  by  magnificent  bridges,  and  mountains  tunneled  in  the 
construction  of  great  works  of  inter-communication.  The  stage-coach  long  since  dis- 
appeared from  the  main  highways,  and  water  communication,  in  many  sections,  has 
been  rendered  unprofitable  by  the  building  of  lines  of  railroad  that  successfully  com- 
peted for  the  carrying  trade.  The  railroad  has  so  well  met  the  necessities  of  the  peo- 
ple that  by  common  consent  it  is  accepted  as  the  grand  highway  of  the  age. 

Almost  as  soon  as  transportation  by  railroad  had  been  demonstrated  to  be  practica. 
ble  and  more  economical-than  the  methods  previously  in-use,  Pennsylvania  built  iron 
links  in  her  main  line  of  communication  extending  from  the  Delaware  to  the  Ohio, 
and,  stimulated  by  favorable  legislation  from  time  to  time,  the  construction  of  lines 


INTERSTATE    COMMERCE.  123 

in  other  directions.  The  various  enactments  of  the  general  assembly  permitting  the 
building  of  lateral  railroads,  creating  railroad  corporations,  denning  their  powers, 
and  regulating  their  operations,  extend  over  a  period  exceeding  half  a  century.  These 
were  framed  in  the  light  and  from  the  experience  of  the  times,  with  a  view  to  the  de- 
velopment of  the  resources  of  the  commonwealth  and  to  meet  the  necessities  of  the 
people,  but  the  increase  of  population  has  been  so  rapid,  and  the  creation  of  new  in- 
terests so  great,  that,  with  the  multiplication  of  new  corporations,  they  are  insuffi- 
cient in  their  provisions  to  effectively  protect  the  varied  interests  of  investors,  the 
persons  served  by  the  transportation  lines,  or  the  general  public. 

The  first  legislation  authorizing  any  kind  of  state  supervision  of  transportation 
lines  was  the  act  of  April  4,  1859,  which  required  each  railroad  corporation  whose 
road  lay  in  whole  or  in  part  within  the  limits  of  the  State  to  make  an  annual  report 
to  the  auditor-general,  embracing  in  detail  its  operations  and  affairs.  This  act  was 
extended  to  canal  companies  April  15,  1863,  and  to  telegraph  companies  April  14, 
1868.  On  the  9th  day  of  April,  1870,  another  act  was  passed,  embracing  in  its  provisions 
each  "railroad,  canal,  navigation,  and  telegraph  company."  Pursuant  to  the  re- 
quirements of  the  constitution  of  1873,  the  act  of  May  15,  1874,  was  passed,  under 
which  the  powers  and  duties  of  the  auditor-general  were  transferred  to  the  secretary 
of  internal  affairs,  who,  by  the  act  of  May  11,  1874,  was  enjoined  to  exercise  a  watch- 
ful supervision  over  the  railroad  and  other  business  corporations  of  the  State,  to  see 
that  they  confine  themselves  strictly  within  their  corporate  limits,  and  to  hear  and 
investigate  complaints  made  against  them  under  oath. 

The  laws  now  in  force  are  sufficient  to  secure  annual  or  special  reports  from  the  cor- 
porations upon  all  subjects  in  which  the  commonwealth,  the  investors  in  railroad 
stocks  or  securities,  and  the  general  public  are  chiefly  concerned.  The  legislature 
evidently  designed,  in  the  fourth  section  of  the  act  last  above  mentioned,  to  provide 
a  remedy  against  companies  for  transcending  their  corporate  functions  or  infringing 
upon  the  rights  of  individual  citizens  ;  but,  that  act  does  not  make  any  provision  for 
compelling  the  attendance  of  either  parties  or  witnesses  on  the  hearing  of  complaints, 
nor  does  it  define  the  "  general  supervision"  enjoined  in  the  constitution,  to  be  exer- 
cised by  the  secretary  of  internal  affairs,  or  authorize  its  enforcement  except  by  the 
making  of  general  or  special  reports  as  above  mentioned.  *  *  *  The  rapid  exten 
sion  of  our  railroad  lines,  the  augmentation  of  capital  invested,  and  the  vast  increase 
of  business  transacted,  showing  results  far  in  excess  of  the  most  sanguine  estimates 
of  a  quarter  of  a  century  ago,  when  the  first  law  providing  for  annual  reports  was 
passed,  exhibit  the  necessity  for  a  more  careful  State  guardianship  over  these  corpo- 
rations, to  harmonize  clashing  interests,  scrutinize  their  operations  and  affairs,  and 
protect  the  rights  of  the  people ;  also,  for  such  additional  legislation  as  will  more 
sharply  define  the  rights  and  privileges  that  these  corporations  may  clearly  exercise, 
and  those  reserved  by  the  Commonwealth.  These  lines  have  been  efficient  agents  in 
the  development  of  the  resources  of  the  State  ;  they  minister  to  the  comfort  and  con- 
venience of  the  people,  and  contribute  largely  to  the  public  revenue,  but  the  fact 
must  not  be  forgotten  that  they  are  creatures  of  the  Commonwealth,  deriving  all  their 
power  from  it,  and  should  be  held  to  a  strict  accountability  for  the  exercise  of  their 
valuable  privileges. 

Many  alleged  wrongs  are  perpetrated  by  railroad  corporations  upon  shippers  as 
well  as  on  people  along  their  lines.  The  method  of  redress  is  so  tedious  and  expen- 
sive that  most  persons  will  submit  to  what  they  are  inclined  to  call  impositions  rather 
than  appeal  to  the  courts.  Such  grievances,  whether  real  or  imaginary,  beget  a 
hostility  to  the  companies  that  is  usually  suppressed  until  when  suitable  opportunity 
offers,  it  is  manifested  in  such  unlawful  acts  as,  unhappily,  have  been  witnessed  on 
more  than  one  occasion.  If  there  existed,  or  if  the  legislature  would  provide, 
authority  to  make  such  examination  of  railroad  companies,  their  lines,  operations, 
and  affairs  as  is  annually  performed  in  many  other  States,  and  for  the  inexpensive 
hearing,  prompt  and  efficient  disposition  of  such  complaints  as  inevitably  arise  be- 


124  INTERSTATE    COMMERCE. 

tween  transportation  companies  and  their  patrons  as  well  as  the  public,  where  every 
citizen  could  feel  assured  of  a  patient  and  impartial  hearing,  a  judicious  exercise  of 
such  power  would  promote  a  better  state  of  feeling  between  all  parties. 

Railroad  lines,  indispensable  to  the  civilization  of  the  age,  have  become  a  public 
necessity,  and  should  not  be  hampered  or  embarrassed  by  any  harsh,  arbitrary,  or  op- 
pressive regulations  whereby  their  efficiency  or  remunerative  operations  would  be  af- 
fected ;  on  the  contrary,  they  are  entitled  to  such  fostering  care  of  the  Government 
as  is  not  inconsistent  with  the  general  welfare.  There  ought  not  to  be  any  ground  of 
conflict  between  the  corporations  and  the  people — neither  can  prosper  without  the 
other.  *  *  *  These  lines  carry  the  products  of  our  farms,  forests,  mines,  and  manu- 
factories, develop  the  rural  districts,  and  assist  to  populate  and  enrich  the  cities. 
They  can  be  made  the  means  of  fostering  improvements  in  some  localities  and  retard- 
ing them  in  others ;  they  can  aid  the  prosperity  of  a  favored  establishment  and 
"freeze  out"  .another.  The  people  need,  and  public  sentiment  demands,  that  the 
letter  and  spirit  of  the  constitutional  prohibition  of  discrimination  in  charges  or 
facilities  for  transportation  shall  be  observed,  so  that  all  points  along  the  line  of  a 
railroad  shall  have  equal  facilities  at  rates  predicated  upon  distance  and  service  per- 
formed. Such  uniformity  cannot  be  secured  as  long  as  each  corporation  is  per- 
mitted to  exercise  its  extraordinary  privileges  as  its  own  interest  dictates.  Com- 
plaint has  been  made  that  in  arranging  freight  taritfs  little  consideration  is  given  to 
the  wants  of  the  shipper  at  points  where  there  is  no  competition.  Passenger  sched- 
ules and  stops  are  arranged  wholly  as  the  officials  of  the  lines  decide,  from  whose  de- 
cision there  is  no  appeal.  Rival  lines  meeting  at  a  given  point  are  often  found  to  so 
arrange  schedules  as  to  unnecessarily  delay  passengers  \vhosedestination  reqiiii'  .1 
change  from  one  road  to  another. 

The  testimony  taken  by  the  committee  in  Philadelphia  revealed  the 
existence  of  considerable  complaint  in  that  State  on  tlie  score  of  dis- 
crimination, and  of  a  demand  for  legislation  to  enforce  the  provisions 
of  the  constitution  on  that  subject.  It  was  shown  that,  while  shippers 
are  guaranteed  equal  rights  in  respect  to  transportation  facilities  by 
the  State  constitution,  by  the  charters  of  the  railway  companies,  and 
by  the  contract  made  with  the  State  in  1861  by  the  Pennsylvania  Rail- 
road Company,  known  as  the  "commutation  of  tonnage  act,"  by  which 
it  agreed  to  charge  no  greater  sum  for  a  short  haul  than  for  a  longer 
ha.nl  in  the  same  direction,  these  constitutional  provisions  and  require- 
ments had  not  been  self-enforcing,  and  that,  as  stated  by  Mr.  John 
Morris — 

There  has  been  an  agitation  on  this  subject  for  twelve  years  or  more  in  Pennsylva- 
nia, and  in  1873  the  leading  points  of  it  were  put  into  the  new  constitution  and 
adopted  by  the  people.  Section  1'2  of  that  article  provided  that  the  legislature  should 
enforce  the  provisions  relating  to  railroads  by  appropriate  legislation.  No  bill  was 
passed  until  1883,  when  the  original  bill  was  mangled  so  as  to  make  it  apply  to  ship- 
ments under  the  same  conditions  and  similar  circumstances  and  in  the  same  period  of 
time.  For  practical  purposes  that  bill  is  absolutely  worthless.  To  the  knowledge  of 
the  railroad  men  there  has  been  no  suit  brought  under  it,  and  it  is  doubtful  whether 
anything  could  be  obtained  under  it  for  the  reason  that  the  circumstances  regulating 
transportation  are  as  manifold  as  the  influences  that  affect  the  currents  of  the  wind 
and  of  the  sea. — (Testimony,  p.  539.) 

RHODE  ISLAND. 

In  1872  Ehode  Island  established  the  office  of  railroad  commissioner, 
giving  to  the  incumbent  inspection  duties  merely.  The  statutes  of  the 
State  require  railroads  to  report  all  accidents  to  the  commissioner,  and 
to  make  annual  reports  to  him.  It  is  his  duty  to  personally  examine 


INTERSTATE    COMMERCE.  125 

the  proceedings  of  any  railroad  whenever  he  deems  it  expedient,  and 
to  report  to  the  general  assembly  whether  such  facilities  and  accommo- 
dations are  furnished  as  are  required,  and  as  to  such  other  matters  as 
affect  the  public  interest.  The  reports  of  the  commissioner  show  that 
his  attention  has  been  devoted  mainly  to  matters  affecting  the  comfort 
and  convenience  of  the  public,  although  the  later  ones  indicate  some 
dissatisfaction  in  the  State  on  account  of  discriminations.  The  commis- 
sioner is  appointed  by  the  governor  for  a  term  of  one  year,  and  his  sal- 
ary is  $500. 

SOUTH   CAROLINA. 

A  railroad  regulation  act  HTas  passed  in  South  Carolina  in  1881  and 
amended  in  1882  and  1883.  the  number  of  commissioners  being  increased 
to  three,  and  their  duties  being  materially  changed  and  extended.  As 
it  now  stands  the  law  requires  annual  reports  to  bemade  to  the  railroad 
commissioners',  the  character  and  items  thereof  being  fully  specified. 
Unreasonable  rates  for  transportation  of  passengers  or  freight,  or  for 
the  use  of  cars,  unjust  discriminations,  rebates,  and  all  other  undue 
advantages  are  prohibited.  The  act  also  prohibits  a  greater  charge  for 
the  transportation  of  any  passenger,  or  of  freight  of  any  description 
for  any  distance  within  the  State,  than  is  made  for  the  transportation 
of  any  passenger  of  the  same  class  or  a  like  quantity  of  freight  of  the 
same  class  over  a  greater  distance  on  the  same  railroad,  or  for  an  equal 
distance,  or  the  making  of  a  greater  charge  for  such  service  at  any 
point  than  is  charged  at  the  same  time  at  any  other  point  on  the  same 
railroad,  as  well  as  every  other  form  of  discrimination.  And  all  such 
discriminating  charges  are  made  prima  facie  evidence  of  violations  of 
the  act.  Exceptions  are  made  in  favor  of  commutation,  excursion, 
and  1,000-mile  tickets,  and  the  issue  of  second-class  tickets  at  lower 
rates  than  first-class.  On  demand  consignees  must  be  furnished  with 
an  itemized  statement  of  freight  charges  before  payment  of  the  same, 
showing  the  amount  to  be  paid  to  each  road,  where  the  shipment  is  over 
more  than  one.  Consignees  may  require  a  settlement  of  charges  ac- 
cording to  the  contract  set  forth  in  the  bill  of  lading  from  the  shipping 
point.  There  is  also  a  provision  which  travelers  will  appreciate,  mak- 
ing baggage-handlers  liable  to  a  fine  not  exceeding  $50,  or  imprison- 
ment for  thirty  days,  for  willfully  or  recklessly  injuring  or  destroying 
baggage. 

There  are  three  commissioners  appointed  by  the  governor  from  dis- 
tricts which  are  specified,  for  terms  of  six  years.  Their  salaries  and  ex- 
penses are  paid  by  the  State,  but  assessed  upon  the  roads  according  to 
their  gross  income.  The  railroads  are  required  to  adopt,  and  keep  ac- 
ible  for  public  inspection,  schedules  plainly  stating  the  kinds  and 
classes  of  property  to  be  carried,  the  different  stations  or  places  in  the 
State,  on  the  line  of  its  own  or  connecting  roads,  between  which  such 
property  shall  be  carried,  and  the  rates  for  given  distances,  including 
all  through  rates  and  joint  rates  with  other  roads  and  all  terminal 
charges.  Changes  are  prohibited  except  upon  thirty  days' public  notice, 
and  it  is  made  unlawful  to  charge  more  or  fan  than  such  schedule  rates. 
Tbecommissioners  are  required  to  revise  these  schedules,  and  allcontracts 
or  agreements  between  the  companies,  and  notify  them  of  any  modifica- 
tions deemed  proper,  the  railroads  being  required  to  adopt  the  schedules 
as  thus  modified,  but  having  the  right  of  appeal  from  the  findings  of 
the  commission  to  the  circuit  court,  the  action  of  the  board  lemaining 
in  force  pending  such  proceedings.  It  is  made  the  duty  of  thecommis 
sioners  to  order  changes  whenever  they  believe  rates  are  in  violation  of 


126  INTERSTATE    COMMEECE. 

the  laws  against  unjust  discriini  nations  and  unjust  rates,  and  to  hear 
all  complaints,  giving  notice  to  the  railroad  and  "conforming  the  mode 
of  procedure,  as  nearly  as  may  be,  to  that  required  of  arbitrators." 
Either  party  may  appeal  from  the  finding  of  the  commission  to  the  cir- 
cuit court,  the  railroad,  however,  being  required  to  give  security  for  the 
payment  of  costs  and  penalties.  It  is  the  duty  of  the  commissioners  to 
ascertain  if  the  revised  schedules  and  agreements  are  complied  with,  and 
they  art*  given  full  powers  of  investigation.  Maximum  passenger  rates 
have  been  fixed  by  the  general  assembly  at  the  rate  of  3  cents  per  mile 
on  roads  whose  annual  passenger  earnings  exceed  $1,800  per  mile;  3£ 
cents  on  earnings  between  $1,000  and  $1,800;  4  cents  on  earnings  be- 
tween $500  and  $1,000 ;  4£  cents  on  earnings  not  over  $500;  and  2  cents 
for  children.  The  second-class  rates  are  2£  cents  for  the  class  first  men- 
tioned above,  3  cents  for  the  second  and  third,  and  4  cents  for  the  fourth, 
and  one  road  is  by  name  authorized  to  charge  4  and  3  cents. 

The  commissioners  are  required  to  proceed  against  corporations  vio- 
lating the  law,  if  such  violation  be  continued  after  notice,  by  applying 
to  the  circuit  court  for  injunction.  They  are  also  required  to  give  no- 
tice to  the  roads  of  repairs,  improvements,  &c.,  deemed  necessary,  and 
to  institute  legal  proceedings  when  they  fail  to  comply  with  their  sug- 
gestions. They  must  investigate  the  causes  of  railway  accidents,  and 
examine  the  condition  of  any  road  on  complaint  of  the  mayor  and  alder- 
men or  council  of  any  city  or  town,  or  board  of  county  commissioners. 
Pooling  contracts  must  be  submitted  to  the  commissioners  for  their  in- 
spection and  approval.  They  may  suggest  objections  thereto,  and  must 
call  on  the  attorney-general  to  institute  legal  proceedings  if  such  con- 
tracts are  not  amended  to  their  satisfaction.  There  are  a  great  many 
other  provisions  in  the  State  statutes  regulating  the  conduct  of  the  rail- 
road business.  One  prohibits  the  loading  or  running  ot  trains  on  Sun- 
days, except  regular  mail  trains,  construction  trains  in  cases  of  emer- 
gency, and  trains  unavoidably  delayed. 

In  their  first  report  under  the  existing  law  (November,  1883)  the 
commissioners  state  that  upon  investigation  they  found  that  there  was 
no  uniformity  in  the  system  of  rates  of  the  different  roads.  "  Indeed, 
the  greatest  irregularity  existed,  each  road  having  its  own  method, 
and,  to  add  to  the  complication,  no  uniform  classification,  and  the  pub- 
lic were,  in  consequence,  unable  to  comprehend  rates  they  were  daily 
dealing  with."  Following  as  closely  as  practicable  the  methods  of  the 
Georgia  Commission  a  "  standard  schedule  of  just  and  reasonable  pas- 
senger and  freight  rates  and  classifications,  also  rules  and  regulations," 
was  issued  and  each  road  was  asked  to  show  what  variations  were 
necessary  in  its  case.  After  hearing  the  representatives  of  the  roads, 
a  standard  schedule  was  finally  adopted  and  promulgated.  The  report 
states  that — 

Iu  fixing  rates  the  commission  established  :t  maximum  based  upon  the  length  of 
haul,  the  capacity  of  the  roads,  the  amount  of  business  of  each,  and  their  financial  con- 
dition, except  where  these  considerations  were  overruled  by  the  requirements  of  the 
law.  The  maximum  rates  may  be  reduced  by  any  railroads,  subject  always  to  statu- 
tory restrictions  requiring  such  reductions  to  be  uniform  and  non  discriminative  in 
their  effect.  *  *  *  The  principle  of  rates  varying  as  to  distance  only,  without 
reference  to  direction  of  movement  or  to  the  point  of  shipment  or  destination,  is  re- 
garded by  the  commission  as  the  fundamental  rule  established  by  the  statute,  and 
this  is  the  principle  that  they  have  endeavored  to  apply  and  maintain  in  all  they 
have  done. 


INTERSTATE    COMMERCE.  127 

The  results  obtained  were  stated  to  be : 

(1)  The  rates  for  short  distances  have  been  generally  reduced  below  what  they 
were  before. 

(2)  The  rates  for  long  distances  are  about  the  same  as  before. 

(3)  In  the  case  of  tbo  Cbarlotte,  Columbia,  and  Augusta  Railroasd  hort-dit-taii< .•«' 
rates  have  been  increased,  and  long-distance  rates  reduced. 

In  their  report  for  1884  the  commissioners  call  attention  to  the  fact 
that  but  few  changes  in  their  schedules  had  been  asked  by  the  railroads 
under  their  statutory  right  to  make  such  applications  as  an  indication 
that  the  standard  tariff  must,  in  the  main,  have  been  just  and  reasona- 
ble. They  say  that  the  roads  generally  co-operated  with  them  in  an 
honest  effort  to  give  the  law  a  fair  trial,  though  some  did  not,  and  con- 
tinue: 

The  commissioners  regret  to  call  attention  to  statements  that  the  decline  in  busi- 
ness of  certain  railroads  is  "  due  to  legislative  enactments  and  the  rulings  of  the 
Railroad  Commissioners."  The  only  comment  that  they  can  allow  themselves  to 
make  is  to  point  to  the  fact  that  the  precise  territory  in  which  this  decline  iu  busi- 
ness has  occurred  is  now  being  penetrated  by  a  new  railroad,  built  with  a  knowledge 
of  these  legislative  enactments  and  the  rulings  of  the  commissioners,  and  intended  to 
be  operated  under  them. 

There  now  exists,  so  far  as  we  are  informed,  no  discriminating  rates  in  the  local 
tariffs  of  the  dift'erent  roads,  either  against  individuals  or  localities,  except  the  rates 
on  the  Charlotte,  Columbia,  and  Augusta  Railroad,  referred  to  elsewhere.  Before  and 
after  the  organization  of  this  board  there  were  frequent  and  sometimes  violent 
changes  in  freight  rates.  This  has  been  rectified,  and  the  present  stability  in  local 
rates  must  tend  to  remove  that  speculative  element  in  business  which  is  inseparable 
from  sudden  and  frequent  changes  in  freight  rates. 

In  the  early  part  of  our  work  much  time  was  required  to  investigate  and  adjust 
complaints  against  the  railroads.  Each  month  these '  complaints  have  diminished, 
and  now  but  few  reach  this  office.  This  confirms  the  experience  of  railroad  com- 
missions generally,  viz,  that  they  promote  in  one  way  or  another  a  spirit  of  consid- 
eration on  the  part  of  the  railroads  for  the  public,  which  results  in  reducing  the 
inevitable  friction  of  such  large  and  rapid  transactions  as  daily  take  place  between 
these  corporations  and  the  business  community. 

There  is  loss  discrimination,  more  stability  in  rates,  fewer  complaints,  and  greater 
harmony  between  the  railroads  and  the  people  than  at  any  time  during  the  adminis- 
tration of  the  present  board  or  their  predecessor. 

TENNESSEE. 

The  State  of  Tennessee  early  adopted  an  internal-improvement  sys- 
tem, under  which  very  liberal  State  aid  was  granted  to  encourage  the 
construction  of  railroads.  An  act  passed  February  11, 1852,  authorized 
the  issue  of  State  bonds  to  a  certain  amount  per  mile  to  certain  com- 
panies named,  to  be  used  iu  supplying  the  superstructure  and  equip- 
ment of  their  roads.  The  amount  of  State  aid  was  greatly  increased 
from  time  to  time.  During  the  civil  war  the  companies  failed  to  pay  to 
the  State  the  interest  upon  the  bonds  loaned  to  them,  and  they  finally 
became  insolvent  with  no  prospect  of  ever  being  able  to  pay  the  princi- 
pal of  their  indebtedness.  They  were  accordingly  taken  possession  of, 
and  sold  by  the  State  through  the  agency  of  a  "railroad  commission  " 
appointed  in  1870  for  that  purpose,  and  consisting  of  the  governor, 
secretary  of  state,  comptroller,  and  three  others. 

(n  March,  1883,  the  legislature  passed  an  act  to  provide  for  the  regu- 
lation of  the  railroads  of  the  State,  and  for  the  appointment  of  a  rail- 


L28  INTERSTATE    COMMERCE. 

road  commission,  which  was  vigorously  and  successfully  resisted  by 
the  railroads.  This  statute  declared  all  railroads  public  highways, 
and  the  exacting  of  more  than  just  and  reasonable  compensation  for 
transportation,  or  the  making  of  any  unjust  and  unreasonable  discrim- 
ination in  transportation,  to  be  extortion,  except  that  contracts  might 
be  made  for  special  rates  for  the  purpose  of  developing  any  industrial 
enterprise.  It  was  provided  that  the  party  injured  could  recover  for 
extortion  as  thus  denned  ten  times  the  amount  of  damages  sustained 
by  the  overcharge  or  unjust  discrimination,  with  attorney's  fee;  but  if 
the  service  was  performed  at  rates  previously  approved  by  the  com- 
mission only  actual  damages,  without  attorney's  fees,  could  be  recov- 
ered. The  act  provided  for  the  appointment  by  the  governor  of  three 
railroad  commissioners,  to  serve  until  January  1,  1885,  and  for  the 
election  of  their  successors  by  the  people  in  November,  1884,  and  every 
two  years  thereafter.  It  was  made  the  duty  of  the  commissioners  to 
investigate  and  determine  whether  the  law  was  violated,  and  to  cause 
suits  to  be  prosecuted  when  it  was,  such  suits  to  be  conducted  by  the 
attorney-general  under  their  direction  and  not  to  be  dismissed  without 
their  consent.  The  penalty  for  violation  ranged  from  $100  to  $1,000. 
The  approval  by  the  commission  of  the  rates  charged  by  any  road  was 
made  prima  facie  evidence  that  such  rates  were  not  extortionate.  The 
act  required  the  railroads  to  post  at  all  their  depots  the  tariffs  approved 
by  the  commissioners,  and  made  it  unlawful  to  give  any  reduction  or  re- 
bate from  such  tariff  to  any  person  which  was  not  made  in  favor  of  all. 
Agreements  between  railroads,  or  between  railroads  and  common  car- 
riers by  water,  providing  for  a  division  or  percentage  of  the  freights  from 
any  place  within  the  State,  were  prohibited.  The  commissioners  were 
required  to  revise  all  railroad  tariffs,  to  notify  the  corporations  of  any 
changes  necessary  to  make  the  rates  just  and  reasonable,  and  to  avoid 
unjust  and  unreasonable  discrimination,  and  to  approve  the  same  when 
such  changes  had  been  made  or  none  were  deemed  necessary.  Failure 
to  make  or  to  conform  to  such  changes  was  made  prima  facie  evidence  of 
extortion.  Provision  was  made  for  hearing  complaints  against  such 
tariffs  or  approved  rates.  The  penalty  for  failing  to  submit  tariffs  for 
revision  when  called  upon  by  the  commissioners  was  fixed  at  $100  per 
day.  The  act  further  conferred  upon  the  commissioners  inspection  dut ies 
similar  to  those  imposed  upon  other  like  boards,  authorized  them  to  ex- 
amine witnesses  under  oath  and  enforce  their  attendance,  and  required 
animal  reports  to  be  made  by  the  railroads.  To  meet  the  objection  that 
such  legislation  might  check  railroad  construction  it  was  provided — 

That  none  of  the  provisions  of  this  act  shall  apply  to  any  railroad  now  being  con- 
structed, or  which  may  hereafter  be  begun  and  constructed,  in  this  State  until  ten 
years  from  and  after  the  completion  of  such  new  railroad. 

The  commissioners  appointed  under  this  statute  qualified  April  25, 
1883,  and  immediately  called  upon  the  roads  to  furnish  their  tariffs  for 
revision.  This  was  done  by  all  the  leading  roads  except  one,  which 
claimed  exemption  from  regulation  of  the  maximum  charges  allowed 
by  its  charter.  After  seven  months'  investigation  and  study  of  the 
questions  awaiting  their  decision,  the  commissioners  prepared  to  for- 
mally revise  the  tariffs..  On  giving  notice  of  their  purpose  to  the  Louis- 
ville a,ud  Nashville  Railroad  Company,  that  corporation  procured  a  re- 
straining order  from  Judge  John  Baxter,  United  States  circuit  judge, 
as  did  another  company.  Bills  were  filed  against  the  commissioners 
by  these  companies  and  motions  for  injunctions  were  made,  which  were 
heard  January  11,  1884,  Judges  Baxter,  Key,  and  Hammond  presiding. 


INTERSTATE    COMMERCE. 


129 


February  29  the  court  delivered  its  opinion,  holding  certain  sections 
of  the  statute  unconstitutional,  and  granting  preliminary  injunctions 
against  the  commissioners.  Four  other  companies  at  once  obtained 
similar  injunctions.  These  injunctions  prevented  the  revision  of  the 
tariffs  of  six  leading  roads,  and  the  commissioners  did  not  deem  it  ad- 
visable to  revise  those  of  other  rival  roads  under  the  circumstances. 

In  their  second  annual  report,  dated  December  1,  1884,  they  state 
that  they  received  numerous  complaints  of  excessive  charges,  over- 
charges, and  unjust  discriminations  by  the  railroads,  but  that  the  com- 
plainants almost  invariably  declined  to  reduce  them  to  writing,  saying, 
in  substance,  "that  they  cannot  afford  to  incur  the  hostility  of  the 
roads."  Some  of  the  complaints  were  adjusted  by  the  roads,  and  some 
valuable  concessions  to  shippers  were  secured  by  the  commissioners. 
In  relation  to  the  construction  of  new  railroads,  the  commissioners  say: 

It  has  been  said  without  proof  or  precedent  that  a  railroad  commission  will  pre- 
vent the  building  of  new  roads  in  Tennessee.  Such  has  been  the  assumption  in  every 
State  where  this  method  of  regulation  has  been  adopted.  And  yet  no  instance  has 
been  adduced  from  the  history  of  commissions  in  more  than  twenty  States  to  sustain 
it .  We  know  of  no  State  that  has  taken  a  backward  step  on  this  subject,  which  it  is 
more  than  probable  they  would  have  done  if  their  commissions  had  prevented  the 
railroad  progress  of  the  State.  Where  new  railroads  are  wanted  and  the  business  of 
the  country  will  justify  their  building  they  will  be  built,  commission  or  no  commis- 
sion. 

It  is  the  opinion  of  all  who  have  given  the  subject  careful  investigation  that  com- 
missions do  not  prevent  the  building  of  new  roads.  On  the  contrary,  the  small  stock- 
holders, who  are  the  chief  and  original  source  from  which  is  derived  the  money  to 
build  new  roads,  who  have  so  often  been  induced  to  part  with  their  stock  at  a  ruin- 
ous loss  by  the  sharp  practices  of  railroad  speculators,  are  more  inclined  to  invest 
their  money  where  the  policy  of  the  State,  through  a  commission,  is  to  secure,  as  far 
as  possible,  stability  in  rates,  establish  friendly  relations  between  the  roads  and  the 
people,  and  prevent  ruinous  impositions  upon  those  seeking  investments,  by  requiring 
the  roads  to  furnish  the  commission  with  sworn  annual  reports  of  their  financial  con- 
dition, and  which  reports  are  open  to  the  inspection  of  the  public.  In  support  of 
this  view,  and  for  the  information  of  those  who  apprehend  paralysis  to  new  railroad 
building,  we  give  a  comparative  statement,  taken  from  Poor's  Railroad  Manual,  pub- 
lished in  1882  and  1883,  showing  the  number  of  miles  of  railroad  built  in  1882  in 
seven  States  with  commission  and  seven  without : 


With  commissions. 

Miles. 

Without  commissions. 

Miles. 

Illinois              

397 

Indiana....  

253 

850 

Colorado  

497 

279 

North  Carolina  

140 

California  

337 

Florida  

179 

Kansas  

547 

Arkansas  

491 

102 

32 

New  York                  

759 

102 

*  *  *  In  those  States  where  commissions  have  been  in  operation  the  reports 
show  that  railroad  building  is  still  in  progress,  the  roads  in  a  healthy  condition,  the 
people  better  satisfied,  commerce  and  facilities  for  transportation  increased ;  and  that 
the  commissioners  have  been  enabled  not  only  to  adjust  many  complaints  and  remove 
causes  for  litigation  between  the  people  and  the  roads,  but  also,  acting  as  arbiters,  to 
adjust  differences  between  the  corporations  themselves. 

In  retiring  from  office  the  commissioners  suggested  the  amendment 
of  the  law  to  meet  Judge  Baxter's  objections. 
S.  Rep.  46 9 


130  INTEESTATE    COMMERCE. 

Following  are  their  conclusions  on  the  question  of  fixing  rates  and  the 
necessity  of  a  commission : 

It  is  no  longer  a  question  as  to  whether  this  vast  power  shall  be  supervised  and  reg- 
ulated by  law.  The  real  question  te  how  shall  this  be  done  wisely  and  well,  so  as  to 
be  just  to  the  people  and  do  no  wrong  to  the  roads  ? 

It  is  suggested  that  the  commissioners  should  not  be  empowered  to  fix  a  tariff  of 
rates  absolutely  binding  on  the  roads  without  appeal  to  the  courts.  They  should  be 
given  ample  power  and  the  means  to  make  a  full  inspection  of  the  roads  and  their 
business,  and  to  publish  the  same,  that  the  citizen  may  know  his  rights  and  the 
methods  by  which  the  roads  are  operated. 

After  careful  investigation  and  revision,  the  commissioners  should  provide  such  a 
tariff  of  charges  as  they  consider  reasonable  and  just  to  the  public  and  the  roads,  and 
the  enforcement  of  this  should  be  left  to  the  courts  and  juries,  with  liberty  to  the 
roads  to  prove  their  charges  reasonable  and  just. 

A  commission  is  the  only  practicable  method  yet  devised  for  the  effective  regula- 
tion of  railroads.  General  statutes  for  this  purpose  have  been  virtual  failures.  And 
perhaps  no  better  evidence  of  both  the  utility  and  necessity  of  commissions  can  be 
given  than  the  fact  that  they  have  been  adopted  in  Europe,  where  railroads  had  their 
origin,  and  by  more  than  half  of  the  American  States,  while  others  are  now  consider- 
ing the  propriety  of  adopting  the  same  method. 

In  a  supplemental  report  the  situation  is  explained  as  follows : 

The  real  and  important  contention  between  the  roads  and  the  State  is  made  upon 
the  words  in  their  charters,  which  are  as  follows :  "  The  company  shall  have  the  ex- 
clusive right  of  transportation  or  conveyance  of  persons,  goods,  merchandise,  and 
produce  over  the  said  railroad  by  them  to  be  constructed :  Provided,  That  the  charge 
of  transportation  or  conveyance  shall  not  exceed  35  cents  per  100  pounds  on  heavy 
articles,  and  10  cents  per  cubic  foot  on  articles  of  measurement  for  every  100  miles, 
and  5  cents  a  mile  for  every  passenger."  The  railroads  contend  that  they  have  a 
right  to  charge  the  maximum  mentioned  in  their  charters.  The  State  insists  they 
never  had  a  right  to  charge  more  than  a  reasonable  sum  for  the  services  rendered ; 
and  that  the  provision  or  limitation  in  the  charter  is  not  a  repeal  of  the  common  law, 
confining  the  charge  to  a  reasonable  sum.  It  was  a  simple  precaution  to  guard  the 
people  against  gross  extortion  and  high-handed  robbery,  which  the  legislature 
feared  might  be  committed  by  these  powerful  corporations. 

*  *  *  Judge  Baxter,  in  his  opinion,  did  not  discuss  the  vital  question  in 
the  suit  aforesaid,  to  wit,  "the  power  of  the  legislature  to  regulate  the  charges 
within  the  maximum  mentioned  in  the  charter,"-  otherwise  than  as  above  shown, 
which  opinion  is  plainly  against  the  railroads  on  this  point.  The  injunction  granted 
is  upon  verbal  omissions  and  technical  objections,  all  of  which  can  be  met  and  rem- 
edied by  proper  amendments.  (See  6  Federal  Reporter,  p.  426.) 

It  appears  from  the  statement  of  General  George  W.  Gordon,  one  of  the 
railroad  commissioners,  who  came  before  the  committee  at  Memphis, 
that  the  case  against  the  commission  was  not  heard  on  its  merits.  A 
preliminary  injunction  restraining  the  board  from  revising  the  rates  of 
certain  companies  was  granted,  mainly  because  of  defects  in  the  statute 
and  of  objections  to  its  phraseology,  but  the  proceedings  went  no  far- 
ther. The  question  of  regulation  became  a  party  one,  and  at  the  elec- 
tion in  November,  1884,  the  commissioners  then  in  office  were  defeated 
by  the  candidates  of  the  minority  party,  although  their  own  party  car- 
ried the  State  as  to  other  offices  and  controlled  the  legislature,  which 
at  the  next  session  (1885)  repealed  the  law  creating  the  commission, 
leaving  in  force  only  a  general  statute  against  discrimination.  General 
Gordon  was  very  positive  in  the  belief  that  the  popular  sentiment  in 
Tennessee  was  overwhelmingly  in  favor  of  railroad  regulation,  with  the 


INTERSTATE    COMMKL'Cl-:.  131 

exception  of  certain  sections  still  greatly  iu  need  of  railroads,  and 
through  which  railroads  had  been  projected,  where  the  people  feared 
that  regulation  might  interfere  with  the  construction  of  new  roads.  The 
considerations  which  influenced  the  abolition  of  the  commission,  and 
which  made  it  possible  in  the  peculiar  situation  of  affairs  at  the  time, 
are  indicated  in  the  following  extracts  from  his  testimony  : 

The  CHAIRMAN.  What  were  the  causes  which  loci  to  the  repeal  of  the  railroad  com- 
mission law  in  your  State  ? 

Mr.  GORDON.  One  of  the  causes  was  that  railroad  regulation  was  made  a  party  ques- 
tion in  our  last  State  canvass,  and  another  was  the  bitter  opposition  of  the  railroad 
corporations  to  any  railroad  commission  law.  The  desperate  (Hurts  of  the  companies, 
through  their  officials,  employe's,  agents,  attorneys,  newspaper  organs,  aud  in  the 
legislature,  were  a  powerful  factor  in  bringing  about  the  repeal  of  the  law.  There 
was  also  some  opposition  to  the  law  in  those  localities  where  new  railroads  were 
wanted.  But,  uninfluenced  by  the  causes  I  have  mentioned,  my  judgment  is  that  the 
overwhelming  sentiment  of  the  people  is  in  favor  of  railroad  regulation  by  a  commis- 
sion (Testimony,  p.  1390). 

It  appears,  therefore,  that  in  Tennessee,  the  only  State  in  which  the 
commission  system  of  regulation  has  been  abandoned  in  recent  years, 
tin'  abolition  of  the  commission  was  due  to  the  opposition  of  the  rail- 
roads, which  were  enabled  to  bring  about  this  result  by  an  unusual  com- 
bination of  circumstances. 

TEXAS. 

No  uniform  method  of  railroad  regulation  has  been  adopted  by  the 
State  of  Texas,  and  reliance  has  thus  far  been  had  upon  such  statutory 
enactments  as  circumstances  seemed  to  demand.  The  general  railroad 
incorporation  act  of  August  15,  1876,  prohibited  the  consolidation  of 
pnrallel  or  competing  roads,  or  consolidations  with  companies  organ- 
ized under  the  laws  of  other  States  or  the  United  States,  and  the  legisla- 
ture reserved  the  right  to  regulate  rates.  The  act  of  April  19,  1879, 
limits  freight  charges  to  50  cents  per  hundred  pounds  per  hundred 
miles,  requires  the  charges  on  each  class  and  quantity  of  freight  to  be  uni- 
form, and  makes  it  prhna  fade  evidence  of  unjust  discrimination  for 
any  company  to  charge  one  person  a  greater  compensation  than  another 
for  the  transportation  of  freightof  the  same  class  iu  equal  or  greater  quan- 
tities  for  the  same  or  a  less  distance,  but  for  distances  of  fifty  miles 
or  less  a  charge  not  exceeding  30  cents  per  hundred  may  be  made. 
The  act  of  July  9, 1879,  authorized  the  attorney-general  or  district  or 
county  attorneys  to  institute  proceedings  against  any  railroad  com- 
plained of  as  charging  an  extortionate  rate  or  refusing  to  draw  the  cars 
of  another  company.  By  the  act  of  April  14,  1882,  passenger  fares, 
which  had  been  previously  limited  to  five  cents  per  mile,  were  reduced 
to  three  cents  per  mile.  Another  act  passed  at  the  same  session  re- 
pealed all  laws  granting  lands  to  any  corporation  for  the  construction 
of  railroads,  and  another  prohibited  railroads  from  charging  a  greater 
sum  than  the  amount  of  charges  specified  iu  the  bill  of  lading,  and  re- 
quired delivery  on  payment  of  such  charges.  An  act  approved  March 
28,  1885.  requires  the  railroads  to  maintain  public  offices  in  the  State 
where  transfers  of  stock  can  be  made  and  claims  settled,  and  requires 
annual  reports  to  be  made  to  the  comptroller  or  governor. 

An  act  approved  March  27,  1885,  sets  out  that,  on  account  of  the 
stringency  of  the  money  market,  many  railroad  companies  have  failed 
or  will  fail  to  comply  with  the  statutes  requiring  the  completion  of  a 
certain  number  of  miles  of  road  annually,  under  penalty  of  forfeiture  of 


132  INTERSTATE    COMMERCE. 

their  corporate  existence,  and  that  no  good  can  result  to  the  State  from 
the  forfeiture  of  their  charters,  wherefore  all  limitations  as  to  time  con- 
tained in  the  statutes  have  been  suspended  until  January  1,  1887. 

UTAH   TERRITORY. 

There  is  no  legislation  for  the  regulation  of  railroad  tariffs  in  force  in 
Utah  Territory,  the  only  laws  on  the  subject  being  those  in  relation  to 
organization,  construction,  &c.,  and  the  rates  to  be  charged  are  not 
limited  by  statute. 

VERMONT. 

The  railroad  commission  of  Vermont  dates  back  to  1855,  when  an 
act  was  passed  providing  for  the  election  biennially  by  the  legislature 
of  a  railroad  commissioner,  whose  salary  was  assessed  upon  the  rail- 
roads. This  system  prevailed  until  1884,  when  the  law  was  so  amended 
as  to  provide  for  the  appointment  of  the  commissioner  by  the  governor 
for  a  term  of  two  years,  and  the  payment  of  his  salary  by  the  State.  It 
is  the  duty  of  the  commissioner  to  inquire  into  and  report  biennially  to 
the  governor  any  neglect  or  infringement  of  the  laws  for  the  regulation 
of  railroads,  the  physical  condition  of  each  road,  its  financial  manage- 
ment, and  what  further  legal  provisions  should  be  adopted.  He  is  au- 
thorized to  establish  a  uniform  system  of  accounts  and  prescribe  the 
returns  to  be  made  by  the  railroads.  He  may  examine  their  books  and 
papers  and  witnesses  under  oath. 

The  general  incorporation  law  authorizes  railroads  to  establish  tolls, 
but  provides  that  the  supreme  court  may,  on  the  application  of  three 
freeholders,  alter  or  reduce  such  tolls,  establish  the  rates  to  be  charged, 
and  give  judgment  to  the  applicants  for  their  costs  and  damages.  The 
act  prohibited  a  greater  charge  for  a  short  distance  than  for  a  longer 
distance  within  the  State. 

A  short  haul  law  was  approved  November  29,  1882,  which  requires 
the  railroads  to  give  equal  and  reasonable  terms  to  all  and  equal  facili- 
ties of  interchange  to  connecting  roads. 

The  second  section  reads  as  follows : 

2.  Two  or  more  corporations,  whose  roads  connect,  shall  not  charge  or  receive  for 
the  transportation  of  freight  to  any  station  on  the  road  of  either  a  greater  euin  than 
is  at  the  time  charged  or  received  for  the  transportation  of  the  like  class  and  quan- 
tity of  freight  from  the  same  original  point  of  departure  to  a  station  at  a  greater  dis- 
tance on  the  road  of  either  of  them  in  the  same  direction. 

In  the  construction  of  this  section  the  sum  charged  or  received  for 
the  transportation  of  freight  shall  include  all  terminal  charges,  pro- 
vided that  this  section  shall  not  be  construed  as  affecting  the  right  of 
any  railroad  company  to  establish  such  rates  on  freights  shipped  over 
their  line  in  car-load  lots  from  points  outside  the  State  to  points  beyond 
the  State  as  may  seem  for  their  best  interests. 

It  is  also  provided  that  the  act  shall  not  apply  to  excursion,  mileage, 
and  commutation  passenger  tickets. 

VIRGINIA. 

The  constitution  of  Virginia  (1867)  provides  that  the  credit  of  the 
State  shall  not  be  granted  to  or  in  aid  of  any  corporation,  that  the  State 
shall  not  subscribe*  to  or  become  interested  in  the  stock  of  any  corpo- 
ration, and  that  it  shall  not  be  a  party  to  or  become  interested  in  any 


INTERSTATE    COMMMERCE.  133 


work  of  internal  improvement  or  en.n'a.nv  in  carrying  on  any  such  work, 
otherwise  than  in  the  expenditure  of  grants  to  the  State  of  land  or 
other  property. 

By  an  act  approved  March  31,  1877,  the  general  assembly  provided 
for  the  election  by  that  body  of  a  railroad  commissioner,  to  hold  office 
for  two  years,  and  be  paid  a  salary  of  $3,000.  The  next  legislature  fixed 
the  salary  at  $2,000.  The  salary  of  the  commissioner  and  his  assist- 
ants, and  the  expenses  of  the  office,  are  assessed  upon  the  railroads  in 
proportion  to  their  gross  income.  The  commissioner  is  given  general 
supervision  of  all  steam  railroads  in  the  State,  and  it  is  his  duty  to  "ex- 
amine the  same,  and  keep  himself  informed  as  to  their  physical  condi- 
tion, and  the  manner  in  which  they  are  operated,  with  reference  to  the 
security  and  accommodation  of  the  public,  and  the  compliance  of  the 
several  corporations  with  the  provisions  of  their  charters,  and  the  laws 
of  the  Commonwealth."  The  next  sections  provide  that— 

3.  Whenever,  in  the  judgment  of  the  railroad  commissioner,  it  shall  appear  that 
any  such  corporation  has  violated  any  laws,  or  neglected  in  any  respect  or  particu- 
lar to  comply  with  the  terms  of  its  charter  or  with  the  provisions  of  any  of  the  laws 
of  the  Commonwealth,  especially  in  regard  to  the  connections  with  other  railroads, 
the  rates  of  toll,  and  the  time  schedule,  he  shall  give  notice  thereof,  in  writing,  to 
such  corporation  ;  and  if  the  violation  or  neglect  is  continued  after  such  notice,  the 
commissioner  shall  make  report  of  the  facts  to  the  board  of  public  works  ;  and  such 
board  shall,  if  upon  inquiry  into  such  facts  it  deems  it  proper  or  necessary,  direct  the 
said  commissioner  to  make  application  to  a  circuit  court,  or  a  judge  thereof  in  vaca- 
tion, for  an  injunction  to  restrain  the  company  complained  of  from  further  continu- 
ing to  violate  the  law  or  the  terms  of  its1  charter. 

4.  Whenever,  in  the  judgment  of  the  railroad  commissioner,  it  shall  appear  that 
repairs  are  necessary,  upon  any  such  railroad,  or  that  any  addition  to  the  rolling 
stock,  or  auy  enlargement  of  or  improvement  in  the  stations  or  station-houses,  or  any 
modification  in  tlie  rates  of  fare  for  transporting  freight  or  passengers,  or  any  change  in 
the  mode  of  operating  the  road  and  conducting  its  business,  is  reas  enable  and  ex- 
pedient in  order  to  promote  the  security,  convenience,  and  accommodation  of  the  pub- 
Irc,  he  shall  give  information  in  writing  to  the  corporation  of  the  improvements  and 
changes  which  he  adjudges  to  be  proper  ;  and  if  the  said  company  shall  fail,  within 
sixty  days,  to  adopt  the  requirements  of  said  commissioner,  ho  shall  make  report 
thereof  to  the  board  of  public  works,  for  such  action  as  it  may  deem  expedient. 

The  commissioner  is  required  to  investigate  the  causes  of  accidents 
resulting  in  the  loss  of  life,  and  also  to  examine  the  physical  condition 
and  operation  of  any  railroad  upon  the  complaint  and  application  of 
the  mayor  and  aldermen  or  council  of  any  city  or  town,  or  trustees  of 
any  town,  or  the  judge  of  auy  county  court.  If  he  shall  adjudge  the 
complaint  well  founded,  he  shall  inform  the  corporation  of  his  adjudi- 
cation, and  should  the  company  fail  within  sixty  days  to  remove  the 
cause  of  complaint  he  shall  make  report  to  the  board  of  public  works, 
lor  such  action  as  it  may  deem  expedient.  The  railroads  are  required 
to  furnish  the  commissioner  with  any  information  required  by  him  upon 
request,  and  to  make  annual  reports.  The  commissioner  is  required  to 
make  an  annual  report  to  the  legislature  of  his  doings,  including  such 
statements,  facts,  and  explanations  as  will  disclose  the  actual  working 
of  the  system  of  railroad  transportation  in  its  bearing  upon  the  busi- 
ness and  prosperity  of  the  commonwealth,  with  such  suggestions  as  to 
the  general  railroad  policy  of  the  commonwealth,  or  as  to  the  condition 
or  conduct  of  any  railroad  corporation,  as  may  seem  to  him  appropriate. 

An  act  approved  March  28,  1879,  requires  the  commissioner  to  cause 
to  be  posted  at  each  depot  such  portions  of  the  statutes  regulating  the 


134  INTERSTATE    COMMERCE. 

tolls  of  railroad  corporations  and  otherwise  prescribing  their  duties  as 
he  may  deem  proper,  with  such  explanations  and  suggestions  as  will 
inform  the  public  of  their  rights  under  such  statutes,  and  will  best  en- 
able any  person  who  may  complain  of  any  violation  of  such  statutes  to 
have  such  violation  properly  inquired  into  and  punished. 

An  act  approved  April  2,  1879,  requires  steamboat,  canal,  and  rail- 
road companies  doing  the  business  of  a  common  carrier  within  the 
State  to  furnish  the  owner  or  consignee  of  any  freight  shipped  ortrans- 
j)orted  over  its  line,  at  the  time  of  its  delivery,  a  bill  plainly  stating  the 
class  to  which  silch  freight  belongs,  the  weight  thereof,  and  the  rate 
charged  for  transporting  the  same.  The  penalty  for  failure  or  refusal 
to  deliver  such  bill  when  the  freight  is  delivered  is  three  times  the 
amount  of  the  freight  charges,  to  be  recovered  before  a  justice  of  the 
peace  or  county  court,  and  the  company  loses  its  right  to  collect  such 
charges.  Officers  or  agents  receiving  freight  charges  without  furnish- 
ing such  bill  shall  be  deemed  guilty  of  a  misdemeanor  and  be  liable  to 
a  fine  not  exceeding  $20. 

At  the  session  of  1883-'S4,  the  house  of  delegates  passed  a  bill  sub- 
stituting a  board  of  railroad  commissioners  for  the  present  commis- 
sioner, and  changing  the  duties  and  powers  of  the  commission,  but  this 
measure  failed  of  passage  in  the  Senate  for  want  of  a  constitutional 
majority,  although  receiving  17  votes  to  10  against  it.  Horace  G.  Mof- 
fett  was  elected  railroad  commissioner  at  this  session,  succeeding 
George  A.  Martin. 

The  present  commissioner  informs  the  committee  that  the  working  of 
the  law  in  Virginia  has  not  been  entirely  satisfactory,  because  the  powers 
of  the  commissioner  are  limited,  and  adds: 

The  railroad  commissioner  has  only  supervisory  control  over  the  railroads.  None 
of  his  decisions  are  final,  and  in  case  of  differences  between  himself  and  the  railroads 
that  cannot  be  adjusted  he  reports  to  the  board  of  public  works,  and  that  in  turn 
to  the  legislature.  The  question  of  enlarging  the  powers  of  the  commissioner  was 
discussed  by  the  last  legislature,  but  nothing  was  done.  The  same  question  -will 
likely  come  before  the  present  legislature,  now  in  session,  as  a  change  of  some  kind  in 
the  present  law  seems  to  be  demanded  by  the  people. 

WASHINGTON  TERRITORY. 

In  Washington  Territory  an  act  to  prevent  extortion  and  unjust  dis- 
crimination was  passed  in  1873,  but  this  was  repealed  by  an  act  ap- 
proved October  18,  1881. 

WEST  VIRGINIA. 

The  constitution  of  West  Virginia  (1872)  provides  that  railroad  cor- 
porations doing  business  in  the  State  shall  make  annual  reports  to  the 
auditor  of  public  accounts  or  some  officer  to  be  designated  by  law. 
Kailroads  are  declared  to  be  public  highways  and  free  to  all  persons  for 
the  transportation  of  their  persons  and  property  thereon,  under  such 
regulations  as  shall  be  prescribed  by  law ;  and  the  legislature  is  required 
to  pass  laws,  applicable  to  all  railroad  corporations  in  the  State,  estab- 
lishing reasonable  maximum  rates  of  charges  for  the  transportation  of 
passengers  and  freights,  and  providing  for  the  correction  of  abuses,  the 
prevention  of  unjust  discriminations  between  through  and  local  or  wTay 
freight  and  passenger  tariffs,  and  for  the  protection  of  the  just  rights  of 
the  public.  The  consolidation  of  parallel  or  competing  roads,  or  the 
obtaining  control  of  such  road  by  another,  without  the  permission  of 
the  legislature,  is  prohibited. 

The  incorporation  net  enacted  in  1873 prohibited  the  incorporation  of 
any  company  for  the  purpose  of  connecting  two  other  roads,  and  thereby 


INTERSTATE    COMMERCE.  135 

abandoning  as  through  routes  any  city  or  town  which  is  the  terminus 
of  either  or  both  of  said  railroads,  without  the  consent  of  such  city  or 
town.  The  act  declares  void  all  stock  dividends  or  other  fictitious  in- 
crease of  capital  stock  or  indebtedness,  and  is  very  complete  in  the 
usual  general  provisions. 

In  accordance  with  the  requirement  of  the  Constitution  an  act  was 
passed  December  27,  1873,  to  establish  maximum  rates  and  to  prevent 
unjust  discriminations  and  extortion.  This  statute  classified  the  roads 
according  to  their  gross  annual  earnings  per  mile  on  the  following 
basis:  Class  A  included  railroads  earning  $10,000  or  more  per  mile  an- 
nually; Class  B,  roads  earning  from  $8,000  to  $10,000;  Class  C,  from. 
$4,000  to  $8,000,  and  Class  D,  less  than  $4,000,  with  a  similar  division 
for  narrow-gauge  roads  based  on  earnings  from  $5,000  down.  A  differ- 
ent scale  of  passenger  rates  for  each  class  was  established,  the  act 
specifying  the  rate  to  be  charged  per  mile  for  any  distance  less  than  50 
miles,  for  distances  between  50  and  100  miles,  and  so  on.  An  elaborate 
elassincatioii  of  freights  was  also  incorporated  into  the  act,  specifying 
the  articles  belonging  to  six  different  classes  and  a  number  of  special 
rates.  For  each  of  these  classes  the  rate  to  be  charged  per  ton  per  mile 
for  distances  not  exceeding  50  miles,  for  distances  between  50  and  100 
miles,  and  so  on,  were  specifically  established.  There  was  a  "short- 
haul"  provision  to  the  effect — 

That  such  railroad  corporation  shall  not  be  permitted  to  charge  for  the  transporta- 
lion  of  freight  and  passengers,  or  either,  a  less  sum  from  one  terminus  of  their  road  to 
the  other  than  from  any  intermediate  station  to  either  terminus  thereof,  noragreater 
urn  for  the  transportation  of  freight  and  passengers,  or  either,  from  auy  intermediate 
station  to  either  terminus  of  road,  or  from  either  terminus  to  an  intermediate  station, 
or  from  one  intermediate  station  to  another,  than  from  any  intermediate  station  to 
either  terminus,  or  from  either  terminus  to  any  intermediate  station,  or  from  one  in- 
termediate station  to  another,  where  the  distance  is  less. 

A  railroad  was  made  liable  to  forfeit  its  franchises  for  any  willful 
violation  of  the  act,  and  penalties  for  its  violation  by  employe's  were 
provided. 

This  statute  remains  in  force;  but  that  it  has  not  proved  any  more 
effective  than  the  similar  inflexible  enactments  made  in  several  Western 
States  about  the  same  time,  but  since  repealed,  is  indicated  by  the 
statement  of  Governor  E.  W.  Wilson,  of  West  Virginia,  who  writes  to 
the  committee,  under  date  of  November  21, 1885,  that,  ."Our  railroad  act 
of  1873  amounts  to  nothing  in  the  way  of  protection  against  discrimina- 
tion, and  is  not  worth  the  time  it  would  take  to  write  out  its  features." 

In  1881  the  house  of  delegates  appointed  a  committee  to  investigate 
railroad  charges,  the  subject  of  discriminations,  and  the  measures  neces- 
sary to  carry  into  effect  the  provisions  of  the  constitution.  The  com- 
mittee reported  the  testimony  taken,  which  indicated  the  existence  of 
discriminations  similar  to  those  complained  of  in  other  States  by  wit- 
nesses who  came  before  this  committee,  but  made  no  formal  report,  and 
no  change  in  the  laws  followed. 

WISCONSIN. 

It  appears  from  the  statement  of  Commissioner  Haugen  (Testimony, 
p.  1341)  that- 

The  Wisconsin  law  provides  in  general  terms  against  discrimination  and  extor- 
tion ;  not  by  using  the  word  "  discrimination,"  however.  It  provides  that  railroads 
shall  charge  one  person  or  company  no  more  than  any  other  person  or  corporation  for 
the  same  service.  And  then  afterwards  it  refers  to  the  provision  as  "discrimination." 
The  commission  has  no  absolute  powers. 


136  INTERSTATE    COMMERCE. 

"There  is  but  one  commissioner,  appointed  by  the  governor,  anil  his 
powers  are  advisory.  If  complaint  is  lodged  with  him  he  is  required  to 
investigate  it,  and,  when  well  founded,  to  report  the  facts  to  the  attor- 
ney-general, who  shall  prosecute,  at  the  expense  of  the  State,  for  the 
benefit  of  the  party  aggrieved.  When  complaints  are  made  the  prac- 
tice is  to  call  upon  the  railroads  to  adjust  them  with  the  shippers. 
Commissioner  Haugen,  who  has  been  in  office  three  years,  states  that  but 
fifteen  or  twenty  complaints  as  to  shipments  are  received  in  a  year;  that 
the  railroads  have  uniformly  adjusted  such  complaints  when  notified  of 
them,  and  that  since  the  establishment  of  the  present  commission,  in 
1876,  there  has  never  been  a  case  reported  to  the  attorney -general. 

The  commissioner  is  required  to  inspect  the  condition  and  manner  of 
management  of  the  railroads,  and  to  examine  into  their  financial  man- 
agement. Provision  is  also  made  for  securing  returns  of  their  receipts, 
earnings,  and  business.  The  revenue  of  the  State  is  derived  princi- 
pally from,  railroads  in  the  shape  of  license  fees  based  upon  their  earn- 
ings, licenses  being  issued  by  the  State  treasurer. 

In  1874,  during  the  "Granger"  agitation j  the  Wisconsin  legislature 
enacted  very  stringent  laws  for  the  regulation  of  railroads,  and  estab- 
lished a  commission  of  three  members.  Within  two  years,  however, 
the  usual  reaction  came,  the  laws  were  amended,  and  the  commission 
reduced  to  one  member.  As  it  now  stands,  the  law  fixes  maximum  rates 
on  two  railroads  in  the  State.  It  applies  to  these  two  by  name,  the  new 
roads  being  built  at  the  time  having  been  exempted  from  the  general 
legislation.  The  commissioner  stated  in  his  examination  that  discrimi- 
nations against  places  were  practiced  by  the  railroads  of  Wisconsin,  but 
that  the  construction  that  has  been  given  the  law  from  the  start  has 
been  that  it  does  not  apply  to  places.  In  his  report  for  1884  the  com- 
missioner says  upon  this  subject : 

Very  few  complaints  as  to  charges  would  be  heard  if  shippers  were  all  treated  alike, 
and  no  discrimination  made  between  places.  The  fixing  of  rates  cannot  at  present 
be  said  to  rest  on  any  fixed  principle,  unless  it  be  to  charge  that  rate  which  will  pro- 
duce the  most  revenue  for  the  time  being.  Discriminating  in  favor  of  one  locality  at 
the  expense  of  another  creates  more  dissatisfaction  than  any  other  one  thing  con- 
nected with  railroad  management.  It  is  not  excessive  rates  that  shippers  complain 
of  as  much  as  discrimination.  "  It  does  not  make  so  much  difference  to  shippers 
what  the  absolute  rates  are ;  the  comparative  rates  are  of  more  importance."  To 
protect  the  small  interests — and  these  are  always  in  the  majority — the  rates  per  car- 
load should  be  the  same  to  those  shipping  one  car-load  as  to  those  shipping  a  thou- 
sand. 

The  present  method  of  giving  special  rates  to  large  shippers  inevitably  tends  to 
drive  the  small  manufacturer,  the  small  merchant,  the  small  business  man  of  every 
description  out  and  to  throw  business  into  the  hands  of  the  few.  Hake  the  car-load 
the  unit  in  freight  values,  and  give  all  an  equal  chance.  The  superior  advantage  of 
large  capital  is  all  that  those  doing  a  small  business  can  contend  against,  and  the 
difference  in  rates  may  at  times  exceed  their  profits. 

It  is  difficult  to  say  what  are  and  what  are  not  reasonable  rates.  Chic  ago  is  to-day 
favored  at  the  expense  of  cities  to  the  east,  and  all  territory  tributary  to  Chicago, 
embracing  Wisconsin,  has  to  some  extent  the  benefit  of  the  low  rate  from  Chicago  to 
the  seaboard.  But  in  many  cases  this  is  more  than  overcome  by  high  local  rates.  As 
railroads  are  originally  built  for  the  local  traffic,  they  might  be  expected  to  nurse  and 
favor  it.  On  the  contrary,  they  carry  competitive  business  at  little  or  no  profit, 
while  local  rates  are  expected  to  makeup  losses  on  through  traffic,  interest  on  bonds 
and  dividends.  This  drives  business  and  manufactures  away  from'the  local  stations 
to  competing  points,  where  the  traffic,  formerly  local  and  enjoyed  by  one  company  at 


INTERSTATE    rOMMEKf'F.  137 

remunerative  rates,  must  be  divided  IK  i  \\ocn  several  competitors  at  lees  paying  or 
non-paying  rates.  This  would  indeed  seein  short-sighted  policy,  and  it  is  difficult 
to  ascribe  any  other  reason  than  the  love  of  conquest.  Would  not  concessions  in  local 
rates  tend  to  both  harmony  and  prosperity  ?  *  *  *  The  whole  question  of  rates  is 
so  complicated,  so  many  and  various  influences  surrounding  it,  that  any  legislation 
for  its  control  should  be  most  carefully  considered.  In  my  opinion  no  more  should 
be  charged  for  the  shorter  than  the  longer  haul  over  the  same  line,  without  special 
cause  showing  necessity  therefor.  But  no  State  legislation  on  the  subject  would 
meet  all  requirements,  without  Federal  legislation  of  a  similar  character, to  support  it- 
The  unnecessary  expense  involved  in  building  needless  parallel  lines  does  not  tend  to 
lessen  the  charge  of  transportation,  and  good  sense  would  seem  to  dictate  that  where 
one  road  eau  well  do  the  work  required,  no  parallel  line  be  permitted  to  be  built.  It 
takes  less  income  to  pay  interest  and  dividends  on  one  line  than  on  two;  and  pro- 
tecting the  original  investment  would  strengthen  the  arguments  for  lower  rates. 

WYOMING  TERRITORY. 

Up  to  the  present  time  there  appears  to  have  been  no  legislation  re- 
stricting the  charges  of  railroad  companies  enacted  in  Wyoming  Terri- 
tory. 


THE  COMPARATIVE  VOLUME  OP  STATE  AND  INTERSTATE 
TRAFFIC— RETURNS  FROM  LEADING  RAILROADS  SHOW- 
ING THEIR  BUSINESS  THUS  DIVIDED. 

The  committee  deemed  it  important  to  ascertain,  if  possible,  how  large 
a  portion  of  the  total  traffic  upon  the  railroads  of  the  United  States  was 
interstate  business  and  under  the  control  of  Congress.  It  was  known 
that  the  railroads  had  not  previously  been  called  upon  to  furnish  this 
information,  and  that  their  records  were  not  kept  in  such  a  way  as  to 
supply  it  readily.  Inasmuch,  however,  as  there  were  absolutely  no  sta- 
tistics upon  which  to  base  even  an  estimate  of  the  relative  proportions 
of  State  and  interstate  business,  because  the  returns  of  "  through  "  and 
"  local  "  traffic  afforded  no  criterion  by  which  these  proportions  could 
be  estimated,  it  was  decided  to  at  least  mnke  an  effort  to  obtain  the 
information.  Letters  were  accordingly  written  to  the  leading  interstate 
roads  asking  for  a  statement  of  their  business,  divided  so  as  to  show  the 
proportions  of  freight  and  passenger  traffic  which  wore  State  and  inter- 
state,  both  as  to  volume  of  business  and  earnings,  or  for  the  best  esti- 
mate that  could  be  made  if  exact  figures  could  not  be  given. 

While  no  returns  have  been  received  from  some  companies,  most  of 
them  manifested  a  desire  to  comply  with  the  request  of  the  committee 
as  far  as  practicable,  and,  as  the  statements  herewith  submitted  show,  a 
number  of  the  companies  forwarded  returns  which  it  required  weeks  of 
labor  to  prepare  and  which  involved  considerable  expense  in  their  com- 
pilation. 

From  these  returns  the  percentages  desired  have  been  figured  and  are 
given  in  the  table  which  follows.  While  they  are  not  sufficiently  com- 
plete to  cover  the  railroad  business  of  the  country,  they  are  of  value  as 
indicating  the  extent  of  the  interstate  traffic  upon  each  road,  considered 
by  itself,  and  afford  an  idea,  at  least,  of  the  importance  of  the  interstate 
business  of  the  United  States. 


138 


INTERSTATE    COMMERCE. 


Name  of  railroad. 

Freight 

Passengers. 

Interstate. 

State. 

Interstate. 

State. 

<c 
to 
a 

a 

§ 

H 

d 
I 

i 

A 

£ 

3 

§ 

H 

o 
1 

i 

.i 

M 

1 
1 

i 

I 

» 

i 
i 

A 

» 

i 

Atlantic  and  Pacific  

79 

87 
54 

21 

13 
46 

65 

88 
35 

35 

12 
65 
40 
49 
84 
45 
42 
47 
60 
14 
57 
60 
CO 

Boston  and  Providence  

75 

74 
53 
83 
72 
35 
30 
92 
68 

80 
73 
48 
84 
56 
58 
68 
94 
77 
66 

25 
96 

47 

u 

28 
65 
70 
8 
32 

15 
27 
52 
16 
44 
42 
37 
6 
23 
34 
34 

18 

24 

60 
51 
16 

•  82 
76 

14 
35 
65 
13 
48 
17 

55 
58 
43 
40 
86 
43 
40 
50 
60 

86 
65 
35 
87 
52 
83 

Chicago  ami  Aliou  

Chicago  and  Atlantic                           

Chicago  Burlington  and  Qnincy                      

('hicai'o  Milwaukee  and  Saint  Paul*    

66 

66 
60 

34 

33 

67 

Chicago,  Rock  Island  and  Pacific  

68 
90 
82 
58 
55 
78 
40 
26 
20 
38 

77 
*3 
90 
61 
39 
82 
53 
19 
23 

32 
10 
18 
42 
45 
22 
60 
74 
80 
62 
36 
54 
18 
30 
54 
11 
40 
64 
21 
8 
80 

23 
17 
10 
39 
61 
18 
47 
81 
77 

"45 
39 
24 
23 
65 
10 
50 
40 
11 
4 

7 
19 
37 
12 
5 
20 
4 
4 
15 
85 
3 
8 
37 
33 
7 
75 

55 
47 
70 
32 
9 
52 
12 
16 
26 

'"w 

39 
69 
65 

24 

85 

93 
81 
63 
88 
95 
80 
96 
96 
85 
15 
97 
92 
63 
67 
93 
25 

45 
53 
30 
68 
91 
48 
88 
84 
74 

""si 

61 
31 

35 
76 
15 

Cincinnati,  Indianapolis,  Saint  Louia  anil  Chicago. 
Cincinnati  Southern  (Ciueinnat'  to  New  Orleans).. 
Cleveland,  Columbus,  Cincinnati  and  Indianapolis. 
Davton  and  Union 

Indianapolis  and  Saint  Louis            

Cincinnati  and  Springfield        .  .            

Delaware  and  Hudson  

Denver  and  Rio  Grande  

1  H'nvtT  and  Kio  Grande  Western  

Fitehburg  Kail  road  

64 
46 
82 
70 
46 
89 
60 
36 
79 
92 

55 
61 
76 
77 
35 
90 
50 
60 
89 
96 

Kansas  Citv  Fort  Scott  and  Gulf 

Kansas  City  Springfield  and  Memphis 

Lake  Erie  and  Western  ..                    .*..           « 

Lake  Shore  aad  Michigan  Southern 

Louisville  and  Nashville*  

Missouri  Pap.iflo.  ,  ... 

7 
33 
13 

34 
47 
47 

93 
67 

87 

66 
53 
53 

Mobile  and  Ohio  

New  York,  Chicago  and  Saint  Louis      

New  York  and  New  England*  

Northern  Pacific  

68 

32 

81 

19 

Old  Colony  system  

11 

70 

57 
42 
75 
25 
25 

26 
60 

64 
36 
55 
43 
53 
65 

89 
30 

43 
58 

•J5 
75 
75 

74 
40 

36 
64 
45 
57 
47 
35 

6 

27 

94 

73 

Pasaumpsic  Kailroad*  

vPennsylvania  Company  (lines  east  of  Pittsburgh 
and  Erie)    

18 
23 
32 
26 
2 

47 
54 
67 
50 
49 
7 

82 

77 
68 

74 
98 

53 
46 
33 
44 
51 
93 
60 

Savannah,  Florida  and  Western  

Charleston  and  Savannah  

Shenandoah  Valley  

Southt-rn  Pacific  system  ...  .. 

Toledo,  Cincinnati  and  Saint  Louis  

Wabash,  Saint  Louis  and  Pivcific  ... 

46 

59 

54 

41 

12 

40 

88 

*Approximate.    See  statement  following. 
THE  RETURNS  IN  DETAIL. 

Herewith  follow  the  detailed  returns  in  full,  as  received  from  each 
road: 

ATCHISON,   TOPEKA  AND  SANTA  FE  RAILROAD. 

J.  F.  Goddard,  assistant  general  manager  of  the  Atchison,  Topeka 
and  Santa  F6  Kailroad  Company,  in  reply  to  the  request  of  the  com- 
mittee, said : 

Our  system,  extending  as  it  does  through  numerous  States  and  Territories,  is  oper- 
ated as  a  whole ;  and  our  accounts  have  not  been  kept  by  States,  or  with  a  view  of 
showing  business  in  that  manner,  simply  for  the  reason  that  it  would  entail  a  very 


INTERSTATE    COMMERCE. 


139 


heavy  additional  expense  to  our  already  numerous  accounts.     I  may  add  that  the 
subject  of  changing  our  present  system  of  accounts  is  tinder  consideration. 

The  fact  is  that  we  have  nothing  to  base  the,  information  upon  which  you  desire, 
which  fact  I  much  regret.  I  hope  that  another  .season  we  may  be  in  position  to  give 
you  at  least  an  estimate  of  the  business,  divided  as  you  wish. 

ATLANTIC   AND  PACIFIC  RAILED  AD. 

D.  L.  Gallup,  auditor  of  the  Atlantic  and  I'uc.ifie  Railroad  Company, 
writes: 

In  compliance  with  your  request,  I  take  pleasure  in  inclosing  herewith  statement 
for  the  fifst  six  months  of  1885,  showing  volume  and  percentages  of  our  interstate 
and  within  State  traffic  for  such  months,  also  the  revenue  per  cent.,  all  of  which 
will,  I  trust,  be  sufficient  for  the  purposes  of  your  commit  ifc: 


Freight. 

Revenue. 

Passengers. 

Revenue. 

Tom. 
56,  912.  86 
15,  121.  18 

Percent. 
79.01 
III).  SO 

Per  cent. 
80.51 
18.49 

Number. 
9,755 
5,  'J28 

Per  cent. 

G.\  11 

:;4.  s:i 

Per  cent. 
87.61 

12.  39 

Within  State  

72,  034.  04 

100 

100 

14,983 

100                     100 

BOSTON  AND  ALBANY  RAILROAD. 


W.  H.  Barnes,  general  manager  of  the  Boston  and  Albany  Railroad 
Company,  forwarded  the  following  estimate  for  the  year  ending  Septem- 
ber 30,  1885: 


Passengers. 

Freight. 

$1,988,777  71 

$1,  715,  108  00 

1,  082,  485  43 

2,  050,  820  74 

3,  071,  263  14 

3,  765,  928  74 

BOSTON  AND  MAINE   RAILROAD. 

Wm.  J.  Hobbs,  auditor  of  the  Boston  and  Maine  Railroad,  writes: 

It  would  be  difficult  to  give  a  correct  answer  to  the  inquiry  of  the  committee,  but 
he  est  imates  that  the  number  of  passengers  carried  to  other  States  would  be,  say,  5  to 
10  per  cent.,  and  the  tons  of  freight  from  In  to  15  per  cent.  The  business  of  the  road 
is  largely  in  Massachusetts. 

BOSTON  AND  PROVIDENCE  RAILROAD. 

A.  A.  Folsom,  superintendent  of  the  Boston  and  Providence  Railroad 
Corporation,  stated  that  the  proportion  of  the  total  freight  and  passen- 
ger traffic  of  that  road  during  the  year  ending  September  30,  1884, 
which  was  interstate  was: 

Passengers:  Number  of  passengers,  18  per  cent.;  income,  60  per  cent. 
Freight:  Number  of  tons,  75  per  cent.;  income,  85  per  cent. 

BURLINGTON,   CEDAR  RAPIDS  AND   NORTHERN   RAILWAY. 

J.  C.  Broeksmit,  auditor  of  the  Burlington,  Cedar  Rapids  and  North- 
ern Railway  Company,  submitted  the  following  statement: 

FREIGHT  TRAFFIC. 

Through  tonnage,  from  one  State  into  or  through  another,  1,293,063  tons;  earnings 
on  same,  $1,561,639.39. 
Local  tonnage,  453,325  tons;  earnings  on  same,  $586,480.54. 


140  INTEESTATE    COMMERCE. 

PASSENGER   TUAFFIC 

Through  passengers,  from  one  State  into  or  through  another,  130,904 ;  earnings  on 
same,  $343,732.99. 
Local  passengers,  419,468;  earnings  on  same,  $329,831.61. 

CENTRAL  RAILROAD   OF   GEORGIA. 

W.  F.  Shellman,  traffic  manager  of  the  Central  Railroad  and  Bank- 
ing Company  of  Georgia,  submitted  the  following  statement  of  the  local 
and  interstate  traffic  of  the  roads  named,  operated  by  that  company  : 

[Central  Railroad  (Savannah  Division) ;  Central  Railroad  (Atlanta  Division) ;  Southwestern  Rail- 
road ;  TJpson  County  Railroad  ;  Savannah,  Griffin  and  North  Alabama  Railroad;  Eufanla  and  Clayton 
Rayroad ;  Montgomery  and  Eufaula  Railway ;  Columbus  and  Western  Railway ;  Port  Royal  and  Au- 
gusta Railway  ;  Augusta  and  Knoxville  Railroad.] 


Tons. 

Revenue. 

Local  freight  

580,  105 

$1  621,  701  27 

Interstate  freight  

667  396 

1  525,  589  00 

Local  passage  

819,  363  77 

Interstate  passage  

152,  650  72 

Total  

1,  247,  431 

4,  112,  304  76 

CHESAPEAKE  AND  OHIO  RAILWAY. 

C.  W.  Smith,  general  manager  of  the  Chesapeake  and  Ohio  Eailway 
Company,  submitted  the  following : 

The  proportion  of  interstate  traffic  is  ahout  as  follows,  viz : 
For  the  Chesapeake  and  Ohio  Railway : 

Freight :  83  per  cent,  of  tonnage,  or  84  per  cent,  of  revenue. 

Passenger :  14  per  cent,  of  travel,  or  55  per  cent,  of  revenue. 
For  the  Elizabethtown,  Lexington  and  Big  Sandy  Railroad : 

Freight:  72  per  cent,  of  tonnage,  or  56  per  cent,  of  revenue. 

Passenger :  35  per  cent,  of  travel,  or  58  per  cent,  of  revenue. 
For  the  Kentucky  Central  Railroad: 

Freight :  35  per  cent,  of  tonnage,  or  58  per  cent,  of  revenue. 

Passenger :  65  per  cent,  of  travel,  or  43  per  cent,  of  revenue. 

These  figures  are  (discarding  decimals)  the  actual  results  from  a  careful  working 
out  of  one  of  the  largest  traffic  months  this  year. 

CHICAGO  AND  ALTON  RAILROAD. 

Charles  H.  Chappell,  general  manager  of  the  Chicago  and  Alton 
Railroad  Company,  in  forwarding  the  statement  furnished  by  his  com- 
pany, said : 

This  statement  is  based  upon  the  closest  estimate  we  can  make,  as  we  keep  no  rec- 
ords that  show  our  business  thus  divided. 

In  this  connection  I  would  call  the  committee's  attention  to  the  fact  that  these 
figures,  and  in  fact  almost  any  statistics,  are  very  unreliable.  For  instance,  the  busi- 
ness we  report  as  interstate  comprises  tonnage  to  and  from  every  State  from  the  At- 
lantic to  the  Pacific.  Every  road  over  which  this  business  passes  will  report  this 
identical  tonnage  as  interstate,  thus  multiplying  many  times  the  actual  tonnage  that 
should  be  classed  as  through  business. 


INTERSTATE    COMMERCE. 


141 


In  explanation  of  the  statement  herewith  printed  Mr.  Chappell  wrote : 

On  the  C.  and  A.  R.  R.  the  "  tonnage  "  and  "  number  of  passengers  carried,"  inter- 
state in  Illinois  and  Missouri,  are  the  same.  To  illustrate:  A  passenger  from  Chicago 
to  Kansas  City  is  a  passenger  interstate  to  Illinois,  and  the  same  is  again  interstate 
to  Missouri.  Now  let  the  statement  read  as  follows : 


Passengers. 

Freight. 

Number. 
1,3)9,376 
248,  926 
339,  184 

1,  907,  486 

Per  cent. 
68.88 
13.05 
18.07 

100.  00 

Tout. 
2,403,5(9 
1,082,544 

112,  231 

Per  cent. 
66.80 
30.08 
03.12 

Missouri  local  -  

Total  

3,  598,  284 

100.00 

Statement  of  passenger  and  freight  earnings,  number  of  passengers,  and  tons  of  freight  car- 
ried, divided  between  State  and  interstate  traffic,  for  the  year  1884. 


Passenger. 


Number. 

Per  cent. 

Earnings. 

Per  cent 

Illinois  local  

1,  319,  376 

248,  926 

68.88 
13.05 

$1,103,327  55 
475,  249  15 

48.43 
20.85 

Illinois  interstate  

1,  568,  302 

81.93 

1,  578,  576  70 

C9.28 

339,  184 
248,  926 

18.07 
13.05 

254,  857  31 
444,  995  13 

11.19 
19.53 

Missouri  interstate  

Total  earnings  in  Missouri  

588,110 

31.12 

699,  852  44 

30.72 

(franil  total                                         .... 

1,  907,  486 

100.  CO 

2,278,429  14 

100.00 

Freight. 

Tonnage. 

Per  cent. 

Earnings. 

Per  cent 

Illinois  local  

2,403  509 

66.80 
30.08 

$2,  042  880  46 
2,  252,  105  22 

33.64 
37.08 

Illinois  interstate  

Total  earnings  in  Illinois  

3,480,C53          96.88 

4,  294,  985  68 

70.72 

Missouri  local  

112,231 
1,  082,  544 

3.12 
30.08 

208,  084  09 
1,  570,  604  84 

3.42 
25.86 

Missouri  interstate  

Total  earnings  in  Missouri  

l,  194,  775          33.  20 

1,  778,  688  93 

29.28 

Grand  total  

3,  598,  284 

100.00 

6,  073,  674  61 

100.00 

CHICAGO  AND  ATLANTIC  RAILWAY. 

Frederick  Broughton,  general  manager  Chicago  and  Atlantic  Kailway 
Company,  forwarded  the  following  statements  signed  by  J.  D.  Kershaw, 

the  auditor : 

Statement  of  volume  and  earnings  of  passenger  traffic  for  year  1884-'85. 


• 

Number. 

Revenue. 

Volume  of  and  revenue  derived  from  traffic  originating  and  ending  in  Ohio  
Volume  of  and  revenue  derived  from  traffic  originating  in  and  passing  out  of 
Ohio  

44,24'J 
50  104 

$23,  814  22 
157  940  29 

Volume  of  and  revenue  derived  from  traffic  originating  in  and  ending  in  Indiana. 
Volume  of  and  revenue  derived  from  traffic  originating  in  and  passing  out  of 
Indiana  ..   

54,010 
15  633  J 

21,  4^4  50 
21,632  76 

Volume  of  and  revenue  derived  from  traffic  originating  and  ending  in  Illinois.  . 
Volume  of  and  revenue  derived  from  traSkxoiginatUlg  in  and  passing  out  of 
Illinois  

11,444} 
35  485 

4,  450  03 
118,600  59 

Total  passenger  traffic  for  year  ending  June  30,  1885  

210,  930J 

347,  872  39 

142  INTERSTATE    COMMERCE. 

Statement  of  freight  traffic  and  earnings  for  year  1884-'85. 


Tonnage. 

Revenue. 

Tonnage  of  and  revenue  derived  from  freight  traffic  originating  and  ending 

98,  777,  636 

$37  385  81 

Tonnage  of  and  revenue  derived  from  freight  traffic  originating  in  and  paes- 

466,  765,  396 

278  907  74 

Toiinaire  of  and  revenue  derived  from  freight  traffic  originating  arid  ending 

37,  178,  387 

14,  144  56 

Tonnage  of  and  revenue  derived  from  freight  traffic  originating  in  and  pass- 

213,  677,  316 

96,  619  96 

Tonnage  of  and  revenue  derived  from  freight  traffic  originating  and  ending 

3,  886,  849 

1,667  03 

Tonnage  of  and  revenue  derived  from  freight  traffic  originating  in  and  pass- 

981,  406,  253 

499,020  91 

Total  tonnage  and  revenue  for  year  ending  June  30,  1885  

1,  801,  691,  837 

927,  746  01 

CHICAGO,  BURLINGTON  AND   QTJJNCY  RAILROAD. 

Thomas  J.  Potter,  first  vice-president  of  the  Chicago,  Burlington  and 
Quincy  Eailroad  Company,  submitted  the  following  statement  showing 
the  local  and  interstate  business  handled  by  that  company  during  the 
year  1884 : 

Statement  of  local  and  interstate  business  for  1884  upon  lines  of  Chicago,  Burlington 

and  Quincy  Railroad. 


Passenger  business. 

Freight  business. 

Interstate. 

Local. 

Interstate. 

Local. 

Illinois: 

241,  129 
8.8 
|657,  394.  40 
31.4 

298,  35?  J 
23.6 
$657,  430.  77 
47.6 

229,017 
26.2 
$696,  790.  05 
44.1 

29,019 
88.4 
$155,  412.  21 
94.5 

48,149 
67.8 
$39,  060.  89 
73.1 

2,  499,  636$ 
91.2 
$1,435,406.31 
68.6 

967,  247J 
76.4 
$725,  913.  30 
52.4 

640,  170 
73.8 
$883,349.77 
55.9 

3,808 
11.6 
$9,  100.  14 
5.5 

22,814 
32.2 
$14,  331.  57 
26.9 

Illinois: 
Tons  

1,  723,  810 
49.4 
$4,  775,  526.  21 
65.1 

1,  646,  420 
81.9 
$4,  194,  313.  81 
85.9 

1,  578.  539 
84.4 
$3,888,289.36 
84.7 

142,  806 
98.0 
$439,  829.  30 
97.0 

72,  948 
96.2 
$54,444.38 
87.4 

1,  761,  554 
HO.  6 
$2,  553,  373.  86 
34.9 

341,  558 
18.1 
$685,  852.  66 
14.1 

291,  881 
15.6 

$701,  424.  67 
15.3 

2,801 
2.0 
$13,  527.  57 
3.0 

2,  995 
3.8 
$7,  842.  91 
12.6 

Percent  

Percent  
Amount  ........ 

Percent  
Iowa: 

Percent  
Iowa: 
Tons  

Percent  

Percent  

Percent  
Nebraska  : 

Percent  
Nebraska: 
Tons   

Percent  

Percent  
Amount  ........ 

Percent  
Colorado  : 
Fares  ............ 

Percent  
Colorado  : 
Tons  

Percent  

Percent  
Amount  

Percent  
Kansas: 
Fares  

Per  cent  
Kansas  : 
Tons  

Percent  
Amount.  

Per  cent  
Amount  

Percent  

Percent  

CHICAGO  AND  EASTERN  ILLINOIS  RAILROAD. 

O.  S.  Lyford,  general  superintendent  of  the  Chicago  and  Eastern  Illi- 
nois Railroad  Company,  gives  "the  approximate  proportion  of  inter- 
state business,  both  freight  and  passenger,  for  the  last  fiscal  year,"  as 
folllows : 


• 

Total. 

Interstate. 

Freight  earnings  ....... 

$1,  213  148  28 

$798  2°3  00 

Passenger  earnings  

282,  364  54 

113,  828  00 

INTERSTATE    COMMERCE.  143 

CHICAGO,  MILWAUKEE,  AND  SAINT  PAUL  RAILWAY. 

Joseph  F.  Tucker,  assistant  general  manager  of  the  Chicago,  Milwau- 
kee and  Saint  Paul  Railway,  writes  as  follows: 

Our  statistics  are  not,  ami  it  is  not  easy  to  imagine  bow  they  could  be. kept  so  that 
a  correct  reply  could  bo  given  to  your  inquiry.  This  reply  must  be  considered,  there- 
lore,  problematical. 

Should  estimate  two-thirds  freight  tonnage  and  earnings,  one-third  number  of  pas- 
sengers, and  one-half  passenger  earnings  might  fairly  be  placed  under  the  heading  of 
"interstate." 

CHICAGO  AND  NORTHWESTERN  RAILROAD. 

The  percentages  given  in  the  table  for  this  company  are  simply  an 
approximation  based  upon  the  statement  of  Marvin  Hughitt,  the  gen- 
eral manager,  as  follows : 

We  have  not  heretofore  kept  our  accounts  so  as  to  be  able  to  state  what  propor- 
tions of  our  earnings  have  been  derived  from  "  State  "  as  contra  distinguished  from 
"  interstate  "  traffic  ;  consequently  it  will  not  be  possible  for  us  to  give  you  the  infor- 
inatiou  you  desire.  However,  I  would  say  the  larger  proportion  of  this  company's 
business  would  be  affected  by  laws  governing  interstate  traffic. 

CHICAGO,  ROCK  ISLAND  AND  PACIFIC  RAILWAY. 

NYarreu  G.  Purdy,  secretary  and  treasurerof  theChicago,  Rock  Island 
and  Pacific  Railway  Company,  submitted  the  following  comparison  be- 
tween the  interstate  and  local  business  over  that  road  : 


Local. 

Interstate. 

Passenger  traffic  : 

Percent. 
93.13 

Per  cent. 
6.87 

44.62 

55.38 

it  traffic: 
Tonnage  carried  .  

32.09 

67.91 

23.21 

76.79 

By  tbe  term  "local "  used  above,  is  meant  business  which  originates  and  ends  in  the  same  State,  and 
includes  commutation  passenger  business. 

CINCINNATI,   INDIANAPOLIS,    SAINT  LOUIS  AND  CHICAGO  RAILWAY. 

M.  E.  In  galls,  president  of  the  Cincinnati.  Indianapolis,  Saint  Louis 
and  Chicago  Railway  Company,  submitted  the  following  statement 
showing  the  proportion  oflhe  business  of  that  company  that  originated 
and  ended  in  the  same  State  and  that  passed  from  one  State  into  or 
hrough  another  for  the  year  ending  with  June,  1885  (estimated) : 


144 


INTERSTATE    COMMERCE. 


Statement  showing  the  proportion  of  business  that  originated  and  ended  in  the  same  State, 
and  that  passes  from  one  State  into  or  through  another,  for  year  ending  with  June,  1885 
[estimated). 

FREIGHT. 


Ohio. 

Indiana. 

Weight. 

Tons  car- 
ried 1  mile. 

Revenue. 

Weight. 

Tons  car- 
ried 1  mile. 

Revenue. 

Business  that  origi- 
nated andendediii 
the  samo  State.  .  .  . 
Business  that  passes 
from  one  State  in- 
to or  through  an- 
other .     -       ...... 

46,  163,  211 

1,860,000 
20  550  000 

$24,  273  88 
174,  115  29 

334,  697,  600 

13,  280,  000 
120,  COS,  590 

$197,  540  73 
976,  468  70 

Total  

22  410  000 

198,  389  17 

133  888  590 

1,  174,  009  43 

Illinois. 

Total. 

Weight. 

Tons  car- 
ried 1  mile. 

Revenue. 

Weight. 

Tons  car- 
ried 1  mile. 

Revenue. 

Business  that  origi  • 
nated  and  ended  in 
the  same  State  — 
Business  that  passes 
from  one  State  in- 
to or  through  an- 
other    .......... 

63,477,100 

2,460,000 
15,  850  000 

$34,25245 
136  468  32 

444,  337,  911 
2  440  987  799 

17,  600,  000 
157  008  590 

$256,  067  06 
1  287  052  31 

Total...  

18,  310,  000 

170  7^0  77 

2  885  325  730 

174  608  590 

1,  543,  119  37 

PASSENGER. 


Ohio. 

Indiana. 

Passengers. 

Passengers 
carried  1 
mile. 

Revenue. 

Passengers. 

Passengers 
carried  1 
mile. 

Revenne. 

Bmsiness  that  origi- 
nated and  ended  in 
the  same  State... 
Business  that  passed 
from     one     State 
into     or    through 
another  ........... 

28,500 

2,  400,  000 
2,  580,  000 

$55,  175  00 
58  200  00 

746,923 

14,  850,  000 
11  714  758 

$343,  926  43 
251,  966  92 

Total  

4,  980,  000 

113  375  00 

26  5C4  758 

595,  893  35 

Illinois. 

Total. 

Passengers. 

Passengers 
carried  1 
mile. 

Revenue. 

Passengers. 

Passengers 
carried  1 
mile. 

Revenne. 

Business  that  origi- 
nated and  ended 
in  the  same  State  . 
Business  that  passed 
from     one     State 
into    or    through 
another  

7,500 

1,  250,  000 
2,950  000 

$23,  850  00 
62  500  00 

782,  923 
181  965 

18,  500,  000 
17  244  758 

$422,  951  43 
372  666  92 

Total  

4  200  000 

86  350  00 

964  888 

35  744,  758 

795  618  35 

INTERSTATE    COMMERCE. 
CINCINNATI  AND  SPRINGFIELD  RAILWAY  COMPANY. 


Statement  showing  the  freight  and  passenger  traffic  originating  and  terminating  in  each  State 
and  the  intersiate  traffic  for  the  year  1884. 


Freight. 

Passenger. 

Tons. 

Per 

cent. 

Revenue. 

Per 

cent. 

Passen- 
gers. 

Per 

cent. 

Revenue. 

Per 
cent. 

Ohio     

503,  181 
342,501 

59.5 
40.5 

$230,  449  62 
261,904  10 

46.8 
53.2 

751,  734 
32,  957 

95.8 
4.2 

$329,  986  82 
45,  424  81 

87.9 
1L'.  1 

Interstate   

Total     . 

845,  682 

100.  0 

492,413  72 

100.0 

784,  691 

100.0 

375,411  63 

100.0 

CINCINNATI  SOUTHERN  RAILWAY. 


President  Frank  S.  Bond  furnished  the  following  statements  cover- 
ing the  business  of  his  lines  between  Cincinnati  and  New  Orleans,  and 
wrote  as  follows  concerning  them  : 

It  would  give  me  great  pleasure  to  furnish  the  information  asked  for,  but  it  would 
take  a  very  long  time  to  do  this  properly,  and  it  would  necessarily  be  at  a  very  consid  - 
erablo  expense  to  our  companies,  as  it  would  require  the  services  of  additional  clerks, 
our  regular  force  not  having  the  time  to  devote  to  the  work. 

But  for  the  sake  of  furnishing  you  early  information  I  have  had  our  people  make  up  a 
statement  showing  separately  the  State  and  interstate  traffic  of  three  of  our  lines,  i.  e., 
the  Cincinnati,  New  Orleans  and  Texas  Pacific  Railway  (Cincinnati  Southern),  from 
Cincinnati,  Ohio,  to  Chattanooga,  Tenn.,  336  miles,  extending  into  or  through  three 
States;  the  Alabama  Great  Southern,  from  Chattanooga,  Tenn.,  to  Meridian,  Miss., 
295  miles,  extending  into  or  through  four  States ;  and  the  New  Orleans  and  North- 
eastern Railroad,  from  Meridian,  Miss.,  to  New  Orleans,  La.,  196  miles,  extending 
into  or  through  two  States. 

This  statement  is  made  to  cover  the  months  of  October,  November,  and  December, 
1884,  which  are  three  full  average  months,  and  they  show  as  follows : 

[Cincinnati,  New  Orleans  and  Texas  Pacific  Railway  (Cincinnati  Southern),  from  Cincinnati,  Ohio, 
to  Chattanooga,  Teun.,  336  miles.] 


State. 

Interstate. 

Freight  traffic  : 
Number  of  tons  transported  

71  345 

178  481 

Freight  revenue  ............... 

$63  887 

$431  8*2 

Passenger  traffic  : 

94  402 

55  844' 

$46  350 

$120  288 

Express  classed  as  interstate  

$12  130 

Mail  classed  as  interstate  

$14  169 

Miscellaneous,  classed  as  interstate  .... 

$798 

$110  237 

$579  187 

The  two  amounts  aggregating  for  three  months,  $689,423. 
S.  Rep.  46 10 


14G 


INTERSTATE    COMMERCE. 


For  the  Alabama  Great  Southern  Railway,  extending  from  Chattanooga,  Tenn.,  to  Meridian,  Miss. 

295  miles.] 


State. 

Interstate. 

Freight  traffic: 

15,  902 
$23,  509 

38,  766 
$28,  679 

161,  727 
$244,  534 

20,  044 
$52,  709 
$4,  229 
.$7,  !H4 
$458 
$309,  874 

Passenger  traffic  : 
Number  of  passengers  carried  

Passenger  revenue  

V  \jirrsN,  classed  as  interstate  

Mail   cl.issc-d  as  interstate  

$52,188 

The  two  amounts  aggregating  for  three  months,  $362,062. 

[For  the  New  Orleans  and  Northeastern  Railroad,  extending  from  Meridian,  Miss.,  to  New  Orleans, 
La.,  196  miles,  a  new  road  opened  for  through  traffic  that  year.] 


State. 

Interstate. 

Freight  traffic: 
Number  of  tons  transported  

4,266 

P4,  935 
$199,  045 

11,512 
$:!!!,  19;i 
$K,341 
$3,  366 
$208 
$238,  156 

$11,244 

16,  045 
$11,  852 

Passenger  traffic  : 
Number  of  passengers  carried  .  

Express  classed  as  interstate  

Miscellaneous,  classed  as  interstate  

Total  revenue  for  196  miles  ........  

$23,  096 

The  two  amounts  aggregating  for  three  months,  $261,251. 

A  recapitulation  of  these  statements  shows,  on  the  three  roads,  with  an  aggregate 
mileage  of  827  miles,  extending  from  Cincinnati,  Ohio,  to  New  Orleans,  La.,  the 
following : 


, 

State. 

Interstate. 

TotaL 

Number  of  tons  of  freight  transported  was  

91,  573 
$98,  639 
149,  213 

$86,  881 

425,  143 
$875,  381 
87,  400 
$206,  193 
$18,  699 
$25.  479 
$1,  464 

516,  716 

.*!"74.  OJO 

$•-'.->,  470 
$1,464 

Freight  revenue  was  

Number  of  passengers  carried  

Passenger  revenue  was  

Express,  assumed  to  be  all  interstate  

Mail,  assumed  to  be  all  interstate  

Miscellaneous,  assumed  to  be  all  interstate  

Total  revenue  

$185,  521 

$1,  127,  216 

$1,  312,  739 

The  figures  are  for  three  months,  October,  November,  and  December,  1884,  and  if 
multiplied  by  four  will  very  accurately  represent  the  business  of  the  line  for  twelve 
months. 

I  will  add  that  the  statements  do  not  include  transportation  of  fuel  or  material  for 
use  of  the  railway  companies ;  only  commercial  business  proper. 

They  show  that  for  827  miles  of  what  is  practically  a  north  and  south  road  extend- 
ing from  the  Ohio  River  to  the  Gulf  of  Mexico,  the  gross  revenue  was  at  the  rate  of 
$6,349  per  mile  per  annum,  of  which  $897  per  mile,  or  14.13  per  cent.,  was  from  domes- 
tic trade  or  traffic  originating  in  one  State  and  confined  within  the  territoral  limits 
of  the  same  State,  and  $5,452  per  mile,  or  5.87  per  cent.,  was  from  interstate  traffic 
that  originated  in  one  State  and  was  transported  into  or  through  one  or  more  other 
States. 

These  figures  would  seem  to  indicate  the  need  of  a  proper  law  to  be  passed  by  Con- 
gress for  the  regulation  and  for  the  protection,  while  in  transit,  of  this  largo  volume 
of  interstate  traffic  that  State  legislation  cannot  be  made  to  cover,  as  in  Congress 


INTERSTATE    COMMERCE. 


147 


alone  is  vested  the  power  under  the  Constitution  "  to  regulate  commerce  with  foreign 
nations  and  among  the  several  States." 

It  is  evident  that  some  legislation  is  required  in  the  interest  of  the  puhlic  and  also 
of  the  railway  companies,  and  I  hope  your  committee  will  be  successful  in  formulat- 
ing such  a  bill  as  will  protect  the  rights  and  interests  of  all. 

CLEVELAND,  COLUMBI/S,  CINCINNATI  AND   INDIANAPOLIS  RAILWAY. 

General  J.  H.  Devereux,  president  of  the  Cleveland,  Columbus,  Cin- 
cinnati and  Indianapolis  Railway,  submitted,  for  the  information  of  the 
committee,  the  following  statements,  viz  :  (1)  The  Cleveland,  Columbus, 
Cincinnati  and  Indianapolis  llailway,  (2)  Cincinnati  and  Springfield 
Railway,  (•'>)  Indianapolis  and  Saint  Louis  Railway,  (4)  Dayton  and 
Union  Railway,  showing,  respectively,  the  freight  and  passenger  traffic 
originating  and  terminating  in  each  State  and  the  interstate  traffic 
upon  each  of  said  roads  for  the  year  1884. 

In  explanation  of  the  manner  in  which  these  statements  were  to  be 
prepared,  lleneral  Devereux  wrote  : 

Railroad  accounts  as  kept  do  not  furnish  or  remotely  indicate  the  value  and  amount 
of  interstate  tonnage.  It  would  occupy  the  entire  time  of  sixty  men  for  a  month  to 
rx:i  urine  the  separate  way-bills  for  our  freight  figures  in  the  matter  in  seeking  close 
results,  and  such  proceeding  would  bo  impracticable.  But  we  can  make  an  approxi- 
juatejshowing,  and  one  coming  very  near  the  actual  facts,  by  selecting  two  months 
of  the  calendar  year,  vi/,  May  and  November,  and  from  their  operation  average  the 
year's  amount  of  interstate  traffic  in  tonnage  and  revenue.  I  am  sure  no  other  plan 
would  come  nearer  the  truth  in  securing  the  information  for  your  committee. 

Our  situation  in  this  matter  is  neither  peculiar  nor  exceptionable.  No  other  railway 
can  specifically  furnish  such  information,  nor  in  obtaining  it,  approximate  more 
nearly  to  accuracy  of  result  than  will  be  found  in  the  report  to  follow  this. 

Following  are  the  statements  referred  to,  which  were  certified  to  by 
P.  A.  Hewitt,  the  auditor  : 


fhoii-ing  the  freight  and  passenger  traffic  of  the  Cleveland^  Columbus,  Cincinnati 
and  Indianapolis  liailicay  Company  originating  and  terminating  in  each  State  and  the 
interstate  traffic  for  the  year  1884. 


Freight 

Passenger. 

Tons. 

Per 
cent. 

Revenue. 

Per 

cent. 

Passen- 
gers. 

Per 
•  cent 

Revenue. 

Per 

cent 

Ohio  

910,  943 

68,  086 
1,  368,  763 

38.8 
2.9 
58.3 

$926,  945  35 
65,  490  70 
1,  526,  437  19 

36.8 
2.6 
60.6 

595,  102 
234,  662 
108,  883 

63.4 
25.0 
1L6 

$482,  996  41 
130,  418  03 
286,  020  22 

53.7 
14.5 
31.8 

Interstate  
Total  

2,  347,  792 

100.0 

2,  518,  873  24 

100.0 

938,647 

100.0 

899,434  66 

100.0 

Statement  showing  the  freight  and  passenger  traffic  of  the  Dayton  and  Vnion  Eailway 
Company  originating  and  terminating  in  each  State  and  the  inter-State  traffic  for  the  year 

1884. 


• 

Freight. 

Passenger. 

Tons. 

Per 

cent. 

Revenue. 

Per 

cent. 

Passen- 
gers. 

Per 

cent 

Revenue. 

Per 

cent 

Ohio   

54,060 
64,754 

45.5 
54.5 

$41,  273  52 
26,  722  39 

60.7 
39.3 

122,  079 
6,290 

95.1 
4.9 

$57,  580  29 
5,  764  36 

90.9 
9.1 

Interstate  .  .  . 

Total  

118,  814 

100.0 

67,  995  91 

100.0 

128,369 

100.0 

63,344  65 

100.0 

148 


INTERSTATE    COMMERCE. 


Statement  showing  the  freight  and  i>as*cngcr  traffic  of  the  Indianapolis  and  Saint  Louis 
Railway  Company  originating  and  terminating  in  each  State  and  the  interstate  traffic 
for  the  year  1884. 


Freight 

Passenger. 

Tons. 

Per 

cent. 

Revenue. 

For 
cent. 

Passen- 
gers. 

Per 
cent. 

Revenue. 

Per 

cent. 

Indiana  

131,  684 
199,797 
1,  182,  132 

8.7 
13.2 

78.1 

$84,  202  88 
152,  367  12 
1,  099,  983  70 

6.3 
11.4 
82.3 

129,491 
327,  704 
110,750 

22.8 
57.7 
19.5 

$62,  278  29 
158,  949  07 
243,  536  01 

13.4 
34.2 
52.4 

Illinois  

Interstate  ....... 

Total  

1,  513,  613 

100.0 

1,  336,  553  70 

100.0 

567,945 

100.0 

464,  763  37 

100.0 

DELAWARE  AND  HUDSON  CANAL  COMPANY. 

J.  White  Sprong,  comptroller,  furnished  the  following  statement  of 
the  through  and  local  business  for  the  year  ending  September  30, 1885, 
of  the  Northern  Eailroad  Department  of  the  Delaware  and  Hudson 
Canal  Company: 


Through. 

Local. 

Total. 

Number. 

Earnings. 

Number. 

Earnings. 

Number. 

Earnings. 

Albany  and  Susquehanna 
Railroad. 

Number  passengers  carried. 
Number  passengers  carried 

21,541 
2,  499,  821 
675,  954 
92,  194,  944 

80,806 
3,  679,  387 
280,886 
9,736,972 

30,322 
2,  673,  698 
38,  502 
4,019,166 

518,501 
12,  902,  271 
1,  411,  109 
115,  721,  870 

1,948,403 
27,  087,  148 
1,  650,  827 
52,241,207 

121,  184 
4,  355,  793 
395,  729 
24,  810,  899 

539,  745 
15,  402,  092 
2,  087,  063 
207  918,  814 

$41,311  59 

$389,  896  91 

$671,  208  50 

Number  tons  freight   car- 
ried    

Number  tons   freight  oar- 

418,  479  54 

1,183,307  30 

1,601,78684 

Remtdaer  and   Saratoga 
Railroad. 

Number  passengers  carried. 
Number  passengers  carried 
one  mile  
Number  tons  freight  car- 
ried   

2,029,209 
30,  766,  535 
1,  331,  713 
61,  978,  179 

151,  506 
7,029,491 
434,231 
28,830,065 

100,  057  26 

710,  486  69 

$810,  543  95 

Number  tons  freight  car- 
ried one  mile  ............. 

126,851  08 

76,  195  72 
37,413  87 

1,020,003  42 

140,  772  19 
320,  142  09 

1,  146,  854  50 

New  fork  and  Canada  Rail- 
road. 

Number  passengers  carried  . 
Number  passengers  carried 
one  mile  

216,  967  91 
357,  555  96 

Number  tons  freight  car- 
ried   

Number  tons  freigh.  car- 
ried one  mile  

Through  business,  between  the  State  of  New  York  and  other  States ;  local  business, 
originating  and  terminating  in  State  of  New  York. 


INTERSTATE  COMMERCE. 


149 


DENVER  AND  RIO  GRANDE  RAILWAY. 

W.  S.  Jackson,  receiver  of  the  Denver  and  Kio  Grande  Eailway,  in 
forwarding  the  statement  prepared  by  the  auditor,  E.  E.  Murphy,  said 
that  it  embodied  the  best  information  they  possessed,  and  added : 

It  is  necessarily  estimated  in  part,  as  we  don't  keep  a  separate  record  and  could 
not  now  pick  out  the  information  except  at  great  expense.  Indeed,  it  is  doubtful 
if  better  results  could  be  given  than  Mr.  Murphy's  letter  contains,  at  any  expense, 
since  our  data  were  not  based  on  any  expectation  of  such  information  ever  being  re- 
quired. 

Mr.  Murphy's  letter  herewith  follows  : 

Referring  to  information  asked  for  by  the  Special  Committee  on  Interstate  Com- 
merce : 

We  do  not  keep  up  this  information. 

The  most  eareful  estimate  I  can  make  without  considerable  expense,  I  furnish 
below : 


Freight. 

Passengers. 

Tons. 

Tons  1  mile. 

Gross  earn- 
ings. 

Passengers. 

Passengers 
1  mile. 

Gross  earn- 
ings. 

Local  to  Colorado.  .  . 
Interstate  

806,  309 
197  357 

97,  337,  831 
38  155  593 

$3,  098,  072  04 
9°9  794  81 

197,  436 
36  612 

15,  079,  260 
8  289  930 

$752,  587  20 
271  181  77 

Total  

1,  003,  606 

135,493  424 

4  027  866  85 

234,  048 

23,  369  190 

1,  023  768  97 

The  above  earnings  and  statistics  are  for  the  period  July  12,  1884,  to  June  30, 1885. 
DENVER  AND  RIO   GRANDE  WESTERN  RAILWAY. 

D.  0.  Dodge,  manager  of  the  Denver  and  Eio  Grande  Western  Eail- 
way, writes  as  follows : 

From  an  estimate  of  our  freight  and  passenger  traffic,  I  find  that  of  the  freight 
business  the  local  or  "State"  will  average  02  per  cent.,  and  interstate  38  per  cent. 
Of  the  passenger,  local  or  "  State"  is  15  per  cent.,  and  interstate  85  per  cent. 


FITCHBURG  RAILROAD. 

John  Adams,   general  superintendent  of  the  Fitchburg  Eailroad 
Company,  forwarded  the  following  statement : 

• 

Total  passengers  carried  year  ending  September  30,  1884 3, 542, 93C 

Estimated  number  to  and  from  other  States 123, 95fj 

Cross  income  from  passenger  business $992,441  3('« 

Estimated  iueome  from  passengers  to  and  from  other  States 186, 493  0(i 


Total  tons  of  freight  hauled  year  ending  September  30,  1885 2, 112, 15f> 

Estimated  number  of  tons  to  and  from  other  States 1, 343, 36C 

Gross  income  from  freight  business $1,775,247  7ti 

Estimated  income  from  freight  to  and  from  other  States 978,823  10 


150 


INTERSTATE    COMMERCE. 


ILLINOIS  CENTRAL  RAILROAD. 

J.  C.  Clarke,  president  of  the  lU'nois  Ceiitral  Eailroad  Company, 
submitted  the  following  statement,  showing  the  company's  business  in 
the  State  of  Illinois,  both  local  and  interstate,  and  said : 

To  give  you  a  similar  statement  for  the  other  States  that  this  company's  linos  rnn 
through,  viz,  Iowa,  Kentucky,  Tennessee,  Mississippi,  and  Louisiana,  would  take  a 
great  deal  of  time  and  lahor,  and  I  imagine  this  statement  will  answer  all  the  pur- 
poses of  the  committee: 

Statement  showing  freight  and  passenger  business  in  Illinois — local  to  the  State,  interstate, 

and  total. 


^ 

Freight 

Passenger. 

Tons. 

Earnings. 

Number  of 

passengers. 

Earnings. 

Interstate  .............. 

1,  004,  300 
1,  926,  627 

$1,  196,  500  00 
2,  323,  193  78 

180,  567 
3,  791,  002 

$388,  780  76 
1,048,735  75 

Local..  

Total  

2,  930,  927 

3,  519,  693  78 

3,  971,  659 

1,  437,  516  51 

At  the  request  of  the  committee,  however,  Mr.  Clarke  had  the  fol- 
lowing statement  prepared,  showing  approximately  the  entire  inter- 
state and  local  business  of  the  company,  and  said  it  was  the  best  he 
could  do: 


Statement  showing  freight  and  passenger  business,  ichole  line,  1884,  local  to  the  Slate,  in- 
terstate, and  total. 


Freight. 

Passenger. 

Tons. 

Earnings. 

No.  of  pas- 
sengers. 

Earnings. 

Interstate  

1,  827,  776 
2,  136,  927 

$4,  853,  548  84 
3,  048,  493  78 

384,  476 
4,  463,  664 

$1,083,101  92 
1,  606,  837  87 

Local  

Total  

3,  958,  703 

7,  902,  042  62 

4,  848,  140 

2,749,93979 

INDIANA,  BLOOMINGTON  AND  WESTERN  RAILWAY. 

C.  E.  Henderson,  general  manager  of  the  Indiana,  Bloomington  and 
Western  E'ailway,  stated  that  it  would  be  "  almost  impossible  for  us  to 
give  the  information  desired  without  the  expenditure  of  a  large  sum  of 
money,  as  we  do  not  keep  our  accounts  in  such  a  way  that  we  can  read- 
ily give  the  information." 


KANSAS  CITY,  FORT  SCOTT  AND   GULF  RAILROAD. 

George  H.  Nettleton,  general  manager  of  the  Kansas  City,  Fort  Scott 
and  Gulf  Eailroad  Company,  submitted  the  following  statements  as  to 
the  business  of  that  company  for  the  year  1884 : 


INTERSTATE    COMMERCE. 


151 


(1)  Kansas  City,  Fort  Scott  and  Gulf  Railroad. 

Freight : 

Interstate  tonnage tons..  954,859 

Earnings  on  interstate  tonnage $11,212,529  59 

State  local  tonnage tons..  210,749 

Earnings  on  local  tonnage $386,788  65 

c'assenger : 

Number  of  interstate  passengers  carried 225, 385 

Earnings  on  interstate  passenger  business $392,406  43 

Number  of  State  local  passengers 383,832 

Earnings  on  State  local  passenger  business $175,204  55 

(2)  Kansas  City,  Springfield  and  Memphis  Railroad. 

Freight : 

Interstate  tonnage tons . .  313, 177 

Earnings  on  interstate  tonnage $736, 562  15 

State  local  tonnage tons..  135, 138 

Earnings  on  local  tonnage $220, 578  80 

Passenger : 

Number  of  interstate  passengers  carried 40, 067 

Earnings  on  interstate  passenger  business $137,385  06 

Number  of  State  local  passengers 383,832 

Earnings  on  State  local  passenger  business $73,313  99 

The  details  of  the  foregoing  will  be  found  in  the  accompanying  papers. 

Statement  of  interstate  and  local  freight  traffic  of  the  Kansas  City,  Fort  Scott  and  Gulf 
Railroad  Company,  and  the  percentage  of  each  to  the  total,  for  the  year  1884,  tonnage  and 
revenue. 


Tons. 


Revenue. 


INTKKSTATE. 


From  Kansas  to  Missouri 

From  Missouri  to  Kansas 

From  Kansas  to  Kansas  through  Missouri 

From  Missouri  to  Missouri  through  Kansas 


371, 421     $463, 541  82 

163,  085  :    248, 277  86 

14, 180  ;        9,  685  72 

406, 173  !    491, 024  19 


Total  interstate. 


954, 859  ,1,  212,  529  59 


STATE  LOCAL. 


From  Kansas  to  Kansas  — 
From  Missouri  to  Missouri 


150,053 
60,696 


Total  local. 
Total . . . 


210, 749 


1, 105, 608 


285,371  46 
101,417  19 


386, 788  65 


1.  599,  318  24 


PERCENTAGES. 


!  Tonnage.  I  Revenue. 


IXTEK8TATK. 


Kansas  to  Missouri  and  Missouri  to  Kansas 

Kansas  to  Kausas  through  Missouri,  and  Missouri  to  Missouri  through  Kansas. 

Total  interstate,  or  all  traffic  from  one  State  to  the  other  and  from  each 
State  to  the  same  State  through  the  other 

STATE  LOCAL. 

Local  to  Kansas  and  local  to  Missouri 

Total... 


Per  cent. 
45.86 
36.06 


81.92 


18.08 


100.  Ou 


Per  cent. 
44.51 
31.30 


75.81 


24.19 


100.00 


INTERSTATE    COMMERCE. 


Statement  of  interstate  and  local  passenger  traffic  of  the,  Kansas  City,  Fort  Scott  and  Gulf 
Railroad  Company,  and  the  percentage  of  each  to  the  total,  for  the  year  1884,  passengers 
and  revenue. 


Passengers. 

Revenue. 

INTERSTATE. 

90  750 

$113  311  68 

98,  542 

139,  142  51 

From  Kansas  to  Kansas  through  Missouri  

7,479 

9,  262  10 

From  Missouri  to  Missouri  through  Kansas  .-  

28,  614 

130,  6<JO  14 

Total  interstate  »  

225,  385 

392,  406  43 

STATE  LOCAL. 

261,  007 

128  570  83 

From  Missouri  to  Missouri  

122,  825 

46,  633  72 

Total  local  

383,  882 

175,204  55 

Total     . 

609,  217 

567  610  98 

•.,: 


PERCENTAGES. 


Passengers. 

Revenue, 

INTERSTATE. 

Kansas  to  Missouri  and  Missouri  to  Kansas  

Per  cent. 
31.07 

Per  cent. 
44.48 

Kansas  to  Kansas  through  Missouri,  and  Missouri  to  Missouri  through  Kansas. 

5.93 

24.65 

Total  interstate,  or  all  traffic  from  one  State  to  the  other  and  from  each 
State  to  the  same  State  through  the  other  

37.00 

69.13 

STATE  LOCAL. 

Local  to  Kansas  and  local  to  Missouri  

63.00 

30.87 

Total.. 

100.  00 

100.00 

.  -  •  -  .  ---- 


Statement  of  interstate  and  local  freight  traffic  of  the  Kansas  City,  Springfield  and  Mem- 
phis Railroad  Company,  and  the  percentage  of  each  to  the  total,  for  the  year  1884,  ton- 
nage nnd  revenue. 


. 

Tons. 

Revenue. 

DTTEESTATlt. 

From  Missouri  to  Arkansas  

21,  196 

$42,  390  92 

From  Arkansas  to  Missouri  

98,  602 

162,720  14 

From  Arkansas  to  Tennessee  *.  4  

26,  607 

42,  878  12 

From  Tennessee  to  Arkansas  

11,  515 

32,  190  31 

From  Missouri  to  Tennessee,  through  Arkansas  

129,  ]  36 

359,920  8<J 

From  Tennessee  to  Missouri,  through  Arkansas  

26,  121 

96,461  77 

Total  interstate  

313  177 

736  562  15 

STATE  LOCAL. 

• 
Frqm  Missouri  to  Missouri  .                      ..... 

127  121 

205,  248  93 

From  Arkansas  to  Arkansas  

8  017 

15,329  87 

Totallooal  ..    .... 

135,  138 

220,  578  80 

ToUl  

448,315 

957  140  95 

00.001  ,  00.0 


INTERSTATE    COMMERCE. 


153 


Statement  of  interstate  and  local  freight  traffic  of  the  Kansas  City,  Springfield  and  Mem- 
phis Eailro\\d  Company,  $c. — Continued. 

PERCENTAGES. 


Tonnage. 

Revenue. 

INTEK8TATB. 

Per  cent. 
26.72 

Per  cent. 
21.43 

8.51 

7.84 

34.63 

47.68 

69.86 

76.95 

STATE  LOCAL. 

30.14 

23.05 

100.00 

100.00 

Statement  of  inter  at  a  \c  and  local  passenger  traffic  of  the  Kansas  City,  Springfield  and  Mem- 
phi*  Railroad  Company,  and  the  percentage  of  each  to  the  totaltfor  the  year  1884,  passen- 
gers and  revenue. 


Passengers. 

Revenue. 

INTERSTATE. 
From  Missouri  to  Arkansas  

5  908 

$18,  165  62 

From  Arkansas  to  Missouri  

6,488 

20,692  18 

From  Arkansas  to  Tennessee  

8,502 

12,  892  32 

From  Ti'i)ii«'."MT  to  Arkansas  

9,155 

14,  543  91 

issimri  tji  Tennessee  through  Arkansas  

5,121 

36,  200  29 

KIIIIII  'TVim«M>tBB  t.«  Mifutniiri  through  ArkftneflB  .^      ....... 

4,893 

34,  890  74 

Total  interstate...  ..........  . 

40,067 

137,  385  06 

6TATB  LOCAL. 

From  Missouri  to  Missouri  

49,  053 

55,732  51 

From  Arkansas  to  Arkansas  

34,026 

17,  581  48 

Total  local  

83,  079 

73,  313  99 

Total  

123,146 

210,  699  05 

PERCENTAGES. 


• 

Passengers. 

Revenue. 

D5TER6TATK. 

Missouri  to  Arkansas  and  Arkansas  to  Missouri  

Per  cent. 
10.07 

Percent. 

18.44 

Arkansas  to  Tennessee  and  Tennessee  to  Arkansas  

14.34 

13.02 

Missouri  to  Tennessee  and  Tennessee  to  Missouri  through  Arkansas 

8.13 

33.74 

Total  interstate  

32.54 

65.20 

STATE  LOCAL. 
L.nr.al  to  Misamiri  and  lnn.il  to  Arkansas   ..... 

67.46 

34.80 

100.00 

100.00 

LAKE  ERIE  AND  WESTERN  RAILWAY. 

A.  J.  Castater,  auditor  of  the  Lake  Erie  and  Western  Bail  way,  has 
furnished  the  following  statements,  which  he  says  "  are  as  nearly  cor- 
rect as  wo  can  make  them  from  the  records  we  keep  " : 


154 


INTERSTATE    COMMERCE. 


Statement  of  freight  and  passenger  traffic  forwarded  over  the  Lake  Erie  and  Western  Rail- 
way from  July  1, 1884,  to  June  30,  1885,  inclusive. 


Freight. 

Passengers. 

Tonnage 
forwarded. 

Revenue. 

Number. 

Revenue. 

OHIO. 

238,  230 
140,  590 

$276,  C82  69 
110,  352  42 

156,  277 
5,933 

$98,  258  80 
20,  002  41 

Originating  in  and  received  from  railway  connections 
in  Ohio  destined  to  other  States  

Total  for  Ohio  

378,  820 

387,  035  11 

162,  210 

118,261  21 

INDIANA. 

Originating  in  and  destined  to  points  in  Indiana  
Originating  in  and  received  from  railway  connections 
in  Indiana,  destined  to  other  States  

107,  203 
102,  871 

159,624  63 
84,  866  47 

137,  219 
12,406 

• 
84,221  83 

25,  929  06 

Total  for  Indiana        

210,  074 

244,491  10 

149,  625 

110  150  89 

ILLINOIS. 

Originating  in  and  destined  to  points  in  Illinois  
Originating  in  and  received  from  railway  connections 
in  Illinois,  destined  to  other  States  

51,  616 
99,442 

95,  774  77 
87,  716  02 

87,668 
8,630 

51,  468  90 
28,  151  54 

Total  for  Illinois  

151,  058 

183,  490  79 

96,298 

79,  620  44 

LAKE  SHORE  AND  MICHIGAN  SOUTHERN  RAILWAY. 

C.  P.  Leland,  auditor  of  the  Lake  Shore  and  Michigan  Southern  Rail- 
way Company,  says  that  "a  careful  estimate  has  been  made  of  the 
freight  traffic,  based  chiefly  upon  information  obtained  from  the  larger 
stations.  For  passenger  traffic  we  have  relied  upon  our  general  knowl- 
edge of  its  character,  as  no  exact  information  can  be  obtained'.  The 
following  estimate  is  respectfully  submitted : 


Freight. 

Passengers. 

Tons  car- 
ried. 

Earnings. 

Number 
carried. 

Earnings. 

State  traffic  

Per  cent. 
11 
89 

Percent. 
10 
90 

Per  cent. 
25 
75 

Percent. 
15 
85 

Interstate  traffic  

"  The  statement  herewith  attached,  showing  the  number  of  tons  for- 
warded and  received  at  stations  in  the  several  States  during  the  six 
months  ending  June  30,  1885,  will  suggest  the  cause  of  the  large  per- 
centage of  interstate  traffic : " 

Freight  traffic  for  six  months  ending  June  30, 1885. 


States. 

Operated. 

Stations. 

Forwarded. 

Received. 

New  York  

Mite. 
71.0 
100.2 
420.4 
221.  1 
513.6 
14.0 

Number. 
14 
17 
74 
36 
62 
K 

Tons. 
425,  187 
263,  123 
1,897,011 
161,  759 
405,  8C8 
500,  201 

Torn. 
1,  238,  185 
277,  986 
1,  117,  601 
132,623 
468,563 
418,291 

Pennsylvania  

Ohio  

Indiana  :  

Illinois  

Total  

1,340.3 

228 

3,653,149 

3,  653,  149 

INTERSTATE    COMMERCE.  155 

LOUISVILLE  AND  NASHVILLE   SYSTEM. 

Milton  H.  Smith,  president  of  the  Louisville  and  Nashville  Kailroad 
Oompany,  replied  as  follows  to  the  request  of  the  committee: 

This  company  compiles  elaborate  statistics  of  its  traffic ;  Imt  the  information  is  uot 
arranged  so  as  to  enable  it  to  furnish  the  information  desired  by  your  committee. 
Such  information  can,  under  existing  conditions,  only  be  obtained  by  the  employ- 
ment of  a  large  clerical  force,  for  a  long  period,  to  compile  it  from  freight  manifests 
and  ticket  reports.  I  estimate  that  it  would  fully  occupy  the  time  of  twenty  expert 
clerks  for  six  mouths.  I  regret  that  I  cannot  even  make  an  approximate  estimate. 
I  can  only  express  the  opinion  that  the  larger  portion  of  the  traffic  handled  by  this 
company  is  interstate. 

In  a  later  letter  he  wrote : 

The  transportation  lines  controlled  by  the  Louisville  and  Nashville  Railroad  Com- 
pany are,  perhaps,  more  largely  occupied  in  interstate  traffic  than  any  of  the  other 
extensive  systems  of  the  country ;  still,  I  think  the  percentage  of  interstate  traffic 
which  you  suggest,  too  great.  I  think  it  would  be  more  nearly  correct  to  estimate 
the  interstate  traffic  as  being  60  per  cent.,  and  the  revenue  derived  therefrom  50  per 
cent.,  of  the  total  traffic  and  revenue. 

MICHIGAN  CENTRAL  RAILROAD. 

H.  B.  Ledyard,  president  of  the  Michigan  Central  Kailroad  Company, 
in  reply  to  the  committee's  request,  wrote: 

I  would  cheerfully  comply  with  your  request  if  it  were  practicable,  but  we  do  not 
keep  our  records  in  such  a  way  as  to  show  this  information ;  and  as  to  an  estimate, 
we  have  nothing  on  which  to  base  the  same  to  make  it  of  any  value  whatever. 

MISSOURI  PACIFIC  RAILWAY. 

C.  G.  Warner,  general  auditor  of  the  Missouri  Pacific  Railway  Com- 
pany, submitted  the  following  statement  of  the  percentages  of  the  inter- 
state and  State  business  of  that  system : 


Interstate. 

Not  interstate. 

Tonnage  -  ... 

36.2 

63  8 

Freight  revenue  ...................................... 

59.9 

40.1 

Passengers  •.  ......     ..     ............ 

7.4 

92.6 

Passenger  revenue  

33.7 

66.3 

MOBILE   AND   OHIO  RAILROAD. 


George  Layet,  auditor  of  the  Mobile  and  Ohio  Eailroad  Company, 
forwarded  the  following  statement  of  the  State  and  interstate  business 
of  that  road  for  the  year  ending  June  30, 1885 : 


156 


INTERSTATE    COMMERCE. 


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INTERSTATE    COMMERCE. 


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Revenue. 

o  —  .10 

0  —  ,  O 
TNi-l 

o 
•-=" 

CO  IS  IS  CO  tO 
CO  CO  O  IS  IO 

oa 
2 

•HNO5 

is  o  in 

-H«^tl 

ooo  t- 

-H  ^  t— 

Passengers. 

oTo" 

CMrH 

00 

8 

i-HO»OCOO» 
t-  —  tO        IN 

S 

IS  t-  t^- 

1SNN 

LOCAL. 

Alabama  
Mississippi  
Tennessee  
Kentucky  
Illinois  

1 

H 

THKOUOH. 

Alabama  
Mississippi  
Tennessee  
Kentucky  
Illinois  

1 
i 

Aggregate  
Stote  
Interstate  

INTERSTATE    COMMERCE. 


NEW  YOEK,  CHICAGO  AND  SAINT  LOUIS  KAIL  WAY. 

D.  W.  Caldwell.  receiver  of  the  New  York,  Chicago  and  Saiiit  Louis 
Railway  Company,  forwarded  the-  following  statements  prepared  by 
Aiulitor  James  P.  Curry,  and  based  upon  the  traffic  of  the  road  for  the 
mouth  of  April,  1885 : 

Freight  traffic. 


State. 

Originating  and 
ending  in  the  same 
State. 

Interstate,  or  that, 
which  passes  from 
one  State  into  or 
through  another. 

Total. 

Tons. 

Earnings. 

Tons. 

Earnings. 

Tons. 

Earnings. 

New  York  

282 
185 
8,840 
1,990 
730 

$267  46 
240  53 
9,  127  69 
1,  727  64 
177  18 

33,  963 
2,023 
41,985 
25,  648 
37,  785 

$69,  844  88 
1,915  58 
50,  694  40 
36,  940  05 
06,427  52 

34,  245 
2,208 
50,  825 
27,  638 
38,  515 

$70,  112  34 
2,  lf>6  11 
59,  gi>2  09 
38,  667  69 
96,  604  70 

Pennsylvania  

Ohio  

Indiana  

Illinois  

Total  

12,029 

11,  540  50 

141,404 

255,  822  43 

153,431 

267,  362  93 

SUMMARY. 


• 

Tons. 

Per  cent. 

Earnings. 

Per  cent 

12  027 

7  84 

$11  540  50 

4  32 

Freight  traffic  interstate  .  

141,  404 

92.16 

255,  822  43 

95  68 

Total  

153,431 

100.  00 

267,362  93 

100.00 

Passenger  traffic. 


State. 

Originating  and 
ending  in  the  same 
State. 

Interstate,  or  that 
which  passes  from 
one  State  into  or 
through  another. 

Total 

Passen- 
gers. 

Earnings. 

Passen- 
gers. 

Earnings. 

Passen- 
gers. 

Earnings. 

New  York  

781 
1,396 
18,970 
3,460 
590 

$291  23 
397  26 
6,  507  32 
1,  377  85 

208  70 

463 
399 
1,436 
864 
599 

$1,211  32 
364  14 
3,  852  84 
1,  138  42 
1,329  27 

1,244 
1,795 
20,406 
4,324 
1,189 

$1,502  55 
761  40 
10,360  16 
2,  516  27 
1,  537  97 

Pennsylvania  

Ohio.."  

Indiana  

Illinois  

Total  

25,  197 

8,  782  36 

3,761 

7,  895  99 

28,958 

16,  678  35 

SUMMARY. 


Passen- 
gers. 

Per  cent. 

Earnings. 

Per  cent. 

Passenger  traffic  originating  and  ending  in  same  State  
Passenger  traffic  interstate  

25,  197 
3,761 

87.01 
12.99 

$8,  782  36 
7,  895  99 

52.66 
47.34 

Total  

28,958 

100 

16,  678  35 

100 

INTERSTATE    COMMERCE. 


159 


NEW  YORK  AND  NEW  ENGLAND  RAILROAD. 

Charles  P.  Clark,  receiver  of  the  New  York  and  New  England  Rail- 
road, made  the  following  reply  to  the  request  of  the  committee : 

This  road  is  located  in  four  States,  Massachusetts,  Rhode  Island,  Connecticut,  and 
New  York,  and  it  is  not  our  habit  to  separate  the  items  of  revenue  arising  in  each 
State,  and  it  is  therefore  impracticable  for  me  to  give  you  definite  information  as  to 
what  proportion  of  the  total  freight  and  passenger  traffic  is  interstate,  or  which 
passes  from  one  State  into  or  through  another,  as  compared  with  that  which  is  State 
or  originates  or  ends  in  the  same.  State.  Our  auditor  estimates  that  at  least  four- 
fifths  of  our  revenue  is  derived  from  interstate  commerce. 

NEW  YORK,   LAKE  ERIE  AND  WESTERN  RAILROAD. 

John  King,  president  of  the  New  York.  Lake  Erie  and  Western  Bail- 
road  Company,  forwarded  a  letter  to  himself  from  the  comptroller,  S. 
Little,  who  said,  under  date  of  September  9  : 

In  regard  to  the  request  of  the  United  States  Senate  Committee  on  Interstate  Com- 
merce, I  beg  to  say  that  our  records  are  not  kept  in  such  manner  as  would  enable  us 
to  furnish  readily  the  information  it  desires,  and  to  attempt  to  compile  it,  even  ap- 
proximately at  this  juncture,  would  embarrass  us  in  the  preparation  of  our  report  for 
the  fiscal  year  ending  the  30th  instant. 

NORTHERN  PACIFIC  RAILROAD. 

Bobert  Harris,  president  of  the  Northern  Pacific  Railroad  Company, 
forwarded  the  following  statements,  "  giving  the  desired  information  as 
far  as  the  method  of  keeping  the  accounts  will  permit,"  viz  : 

A. — Freight  tonnage  and  earnings  by  States,  showing  shipments  eastward  and 
\\est  ward,  through  and  local,  and  rate  per  ton  per  mile. 

B.— Statement  showing  tons  carried  in  each  State,  separating  the  purely  local  from 
shipments  to,  from,  or  passing  through,  to,  or  from  other  States. 

C. — Statement  showing  passengers  carried,  local  to  each  State,  the  interstate  pas- 
senger part,  and  the  passenger  earnings. 

The  method  of  keeping  the  accounts  is  such  that  it  is  impracticable  to  show  the 
earnings  from  each  class  of  business  in  statement  B  by  States. 

Statement  of  passengers  carried  on  the  Northern  Pacific  Railroad  during  the  year  ending 

June  30,  1685. 


To- 

From— 

Wis- 
consin. 

Minne- 
sota. 

Dakota. 

Montana. 

Idaho. 

Washing- 
ton. 

Oregon. 

TotaL 

Wisconsin  

3,134 

1.028 

43 

3 

4 

4  212 

957 

213  022 

22  112 

6  777 

31 

8  329 

3  038 

254  266 

Dakota     

18 

22  511 

126  764 

1  238 

2 

486 

150  999 

Montana  

5  398 

1  012 

69  732 

441 

3  281 

717 

80  581 

Idaho  

27 

413 

1  238 

2  046 

2 

3  726 

Washington  

5 

6  816 

46 

2  118 

1,964 

76  332 

8  821 

96  102 

Oregon  

1 

841 

4 

315 

32 

13  238 

5  441 

19  872 

Total           .  .  . 

4,  115 

249  643 

149  891 

80  596 

3  708 

103  716 

18  019 

609  688 

BY  STATES. 


Local  

3,134 

213  022 

126,  674 

69,732 

1  238 

76  332 

5  441 

495,  573 

To  other  States  

1,078 

41,244 

24,  255 

10,849 

2,488 

19,  770 

14,  431 

114,  115 

Prom  other  States 

981 

36  621 

23  217 

10  864 

2  470 

27  384 

12,578 

114,115 

Through,  eastward  . 

•>4 

13  088 

7,740 

10  146 

1  193 

32  191 

Th  rou  gh  ,  westward  

50 

11  890 

15  855 

3,757 

49,  734 

Total  

5,  193 

'290,  961 

205,  416 

131,075 

32,197 

128,  436 

32,450 

805,728 

160 


INTERSTATE    COMMERCE. 


Statement  of  passengers  carried  on  the  Northern  Pacific  Railroad  during  the  year  ending 

June  30,  1885 — Continued. 

TRAFFIC  AND  MILEAGE  STATISTICS.* 


Number. 

Mileage. 

Revenue. 

Per  mile. 

5,740 

10,  127,  749 

$2G7,  337  81 

Cents. 
2.64 

9  7l!4 

17,  304,  668 

406  749  68 

2.35 

297,  887 

27,  42t<,  756 

1,  020,  158  23 

3.72 

Local  westward  

l'<>t>  :i::7 

30,  000,  428 

1,  121,  494  08 

3.74 

Total  

609,  688 

84,  861,  001 

2,  815,  739  80 

3.32 

*  Company's  classification. 

t  Througi  means  traffic  between  points  east  of  Bismarck  and  points  west  of  Wallnla  Junction, 
"Wash. 

Statement  shmviny  tonnage  local  to  Stale  or  Territory  and  interstate  on  Northern  Pacific 
Railroad  line  for  fiscal  year  ending  June  30, 1885. 


State  or  Territory. 

Local  to  State  or  Territory. 

Interstate. 

Eastward. 

Westward. 

Total 

Eastward. 

Westward. 

Total. 

Wisconsin  

Tons. 
8,530 
195,038 
23,  209 
42,  076 
106 
14,216 
196 

Tons. 
8,686 
108,  376 
14,  700 
51,  573 
75 
239,  640 
241 

Tons. 
17,  216 
303,  414 
37.909 
94,449 
111 
253.  856 
437 

Tons. 
45,  413 
211,  746 
257,  678 
88,941 
37,  967 
52,882 
9,479 

Tons. 
11,069 
241,  483 
203,  422 
115,  520 
74.924 
93,  524 
28,994 

Ton*. 
56,  482 
4.™,  'J29 
461,  100 
204,461 
ll'J,891 
14ti,  406 
38,  476 

Minnesota  

Dakota  

Montana  

Idabo  

Washington  

Oregon  

Statement  shmving  freight  transportation  over   line  of  Northern  Pacific  Railroad  and 
branches  through  the  below-named  States  and  Territories,  fiscal  year  ending  June  30, 

1885. 


Divisions. 

East  bonnd. 

West  bound. 

Tons 
carried. 

Revenues. 

Tons  one 
mile. 

I. 
_® 

o>  '3 
0.6 

h 

!& 

& 

Tons 
carried. 

Revenue. 

Tons  one 
milo. 

a 
*4 

t.3 

&s 

!« 
5 

Wisconsin  
Minnesota  
Dakota  
Montana  

53,  943 
406,  784 
280,  887 
131,  817 
38,  073 
67,  098 
9,675 

$9,  227  22 
1,465,324  27 
598,602  86 
623,  100  30 
51,271  63 
201,725  57 
6,585  91 

294,864 
03,  927,  276 
43,  004,  762 
38,  785,  946 
3,  162,  925 
7,  746,  568 
349,  056 

Cents. 
3.13 
1.66 
1.39 
1.61 
1.62 
2.60 
1.86 

19,755 
349,  859 
218,  122 
167,  093 
74,  999 
331),  164 
29,  235 

$7,  327  48 
1,  385,  505  41 
1,040,453  11 
1,  064.  739  31 
69,  725  92 
412,  115  03 
19,  923  06 

?.38,  168 
62,  496,  533 
50,  327,  978 
59,  325.  326 
5,907,  MM 
•J4,  -M5.  513 
1,  185,  3T9 

Cents. 
2.16 
2.22 
2.07 
1.79 
1.18 
1,70 
1.68 

Idaho  

Washington  .  .  . 
Oregon  

Totals... 

988,277 

2,  955,  837  76 

187,  271,  397 

1.57 

1,  192,  227 

3,  999,  789  32 

20?,  7P6,  801 

1.96 

INTERSTATE    COMMERCE. 


161 


Statement   showing  freight   transportation  over  line  of  Northern   Pacific  Railroad   and 
branches  through  the  below-named  Stales  and  Territories,  fyc. — Continued. 

RECAPITULATION. 


Directions. 

Tons 
carried. 

Revenue. 

Tons  one 
mile. 

Rate  per 
ton  per 
mile. 

Average 
haul. 

[Cast  bound  : 
Through   

13,226 

$260,811  03 

22  765,  670 

Cents. 
1.14 

Miles. 
1  721  2 

Wav 

538,445 

2,  695,  026  73 

164,  505,  727 

1.64 

305.6 

Total  

551,  671 

2,  955,  837  76 

187,  271,  397 

1.57 

339.4 

West  bound  : 
Through  

32,  400 

717,  369  38 

55,  939,  505 

1.28 

1,  728.  1 

Wav 

672  803 

3,  282,  419  94 

147,  857,  296 

2  22 

219.8 

Total  

705,  209 

3,  999,  789  32 

203,  796,  801 

1.96 

288.9 

Grand  total  

1,  256,  880 

6,  955,  627  08 

391,  068,  198 

1.78 

311.1 

NOTE. — By  "through  freight "  traffic  is  meant  freight  passing  between  points  east  of  Bismarck  and 
west  of  Wallula  Junction. 

OLD  COLONY  SYSTEM. 

In  forwarding  the  following  statement,  0.  F.  Choate,  president  of 
the  Old  Colony  Eailroad  Company,  said : 

The  Old  Colony  Railroad  is  wholly  within  the  State  of  Massachusetts,  except  the 
line  from  Fall  River  to  Newport,  R.  I.  The  Old  Colony  Steamship  Company  runs  its 
steamers  between  Fall  River,  Newport,  New  Bedford,  and  New  York.  The  Fall  River 
and  Warren  Eailroad  is  a  short  line  (10  miles)  between  Fall  River  and  Warren,  R.  I. 
The  Union  Freight  Railroad  is  a  street  railroad  in  Boston  between  the  freight  stations 
of  the  railroads  terminating  in  the  city. 

The  statement  sent  you  is  as  accurate  a  one  as  can  be  made  of  the  freight  and 
passenger  traffic  upon  the  Old  Colony  system  transported  by  it  from  one  State  to 
another.  Of  course  there  is  a  considerable  amount  of  freight  included  in  this  state- 
ment which  is  local  upon  our  lines,  but  which  is  carried  by  other  companies  across 
the  State  lines.  It  would  be  difficult  if  not  impossible  to  determine  from  our  books 
the  amount  of  this,  but  I  presume  the  returns  of  those  transportation  companies 
which  transport  it  over  the  line  will  include  it. 

Interstate  commerce  of  the  Old  Colony  system  of  transportation. 

Total  passenger  business  on  the  Old  Colony  Railroad,  Fall  River,  Warren  and  Provi- 
dence Railroad,  and  Old  Colony  Steamboat  Company  for  twelve  mouths  ending  May 
31,  1885 : 

Number  of  passengers  carried . 8,237,116 

Earnings  of  passenger  department $3,134,970  81 

Passengers  carried  on  our  lines  from  one  State  into  or  through  another  for  same  time 

Number  of  passengers 498,722 

Earnings  from  same $857,427  71 

Total  freight  business  on  the  Old  Colony  Railroad,  Fall  River,  Warren  and  Provi- 
dence Railroad,  Union  Fort  Railroad,  and  Old  Colony  Steamboat  Company  for 
twelve  months  ending  May  31,  1885 : 

Tons  freight  carried 1,197,490 

Earnings  of  freight  department $2,475,820  42 

Freight  carried  on  our  lines  from  one  State  into  or  through  another  for  same  time : 

Tons  freight 228,369 

Earnings  from  same $646,008  77 

S.  Eep.  46 — -11 


162 


INTERSTATE    COMMERCE. 


OREGON  RAILWAY  AND  NAVIGATION  COMPANY. 

G.  H.  Prescqtt,  manager  of  the  Oregon  Railway  and  Navigation  Com- 
pany, furnished  the  committee  with  the  following  information  covering 
the  lines  of  the  company  in  Oregon : 

It  is  estimated  that  the  freight  tonuage  cm  business  originating  and  ending  in  the 
State  was,  for  the  year  ending  Juue  30,  1883,  2:26,263,239  pounds,  on  which  the  earn- 
ings were  $592,687.33.  On  interstate  business  for  same  period  the  tonnage  was 
406,405,647  pounds,  on  which  the  earnings  were  $1,208,812.14. 

The  number  of  passengers  carried  originating  and  ending  in  the  State  was  45,940, 
earnings  for  same  being  $182,941.20.  On  interstate  passenger  traffic  the  number  of 
passengers  carried  was  40,948,  earnings  for  same  date  being  $416,441.16. 

PASSUMPSIC  RAILROAD. 

H.  E.  Folsom,  superintendent  of  the  Passnmpsic  Kailroad,  informed 
the  committee  that  he  was  unable  to  give  exact  figures,  and  that  the 
best  estimate  he  could  make  was  that  60  per  cent,  of  the  revenue  and  70 
per  cent,  of  the  volume  of  the  freight  and  passenger  traffic  over  that  road 
was  interstate. 

PENNSYLVANIA  RAILROAD. 

John  P.  Green,  vice-president  of  the  Pennsylvania  Eailroad  Company, 
submitted  the  following  statements  covering  the  business  of  the  lines  of 
that  company  east  of  Pittsburgh  and  Erie: 

Statement  of  the  "business  of  the  Pennsylvania  Railroad  Company's  lines  east  of  Pittsburgh 
and  Erie  (except  Northern  Central  Railway,  Baltimore  and  I  otomac  Railroad,  Alexandria 
and  Washington,  and  Alexandria  and  Frederidksburg  Pail  trays'),  during  the  year  1884, 
divided  so  as  to  show  the  interstate  traffic  separate  from  other  traffic. 

INTERSTATE  TRAFFIC. 


Road. 

Freight. 

Passenger. 

Total. 

Tons 
carried. 

Earn  lags. 

Passen- 
gers car- 
ried. 

Earnings. 

Pennsylvania  Railroad  and  branch- 

11,  015,  269 

7,  399,  204 
3,  086,  976 

1,  640,  751 
274,  733 
68,  770 

$12,731,87657 

6,  855,  692  44 
1,891,345  41 

2,  177,  633  18 
211,731  91 
60,  521  20 

644,  554 

2,  433,  947 
127,  488 

1,  353,  053 
79,  084 
24,377 

$2,  126,  958  55 

2,  782,  970  74 
65,  669  45 

2,  003,  045  89 
33,322  43 
6,760  18 

$14,858,835  12 

9,638,663  18 
1,957,014  86 
4,181,599  57 

275,  054  34 
67,  281  38 

Union  Railroads  of  New  Jersey 

Philadelphia  and  Erie  Railroad  
Philadelphia,  Wilmington  and  Bal- 
timore Railroad  

C  amden  .  and  Atlantic  Railroad  — 
Total  

23,  485,  793 

23,  938,  821  21 

4,  672,  503 

7,  019,  627  24 

30,  978,  448  45 

OTHER  TRAFFIC. 


Pennsylrania  Railroad  and  branch- 
es     

11,  568  556 

$10,091,452  51 

10,  775,  222 

$3,  764,  580  99 

$13,  856,  033  50 

Union  Railroads  of  New  Jersey 
Division  ^  

1,  745,  531 

687,  204  98 

10,  230,  103 

2,  336,  237  03 

3,023,442  01 

Philadelphia  and  Erie  Railroad  .  .  . 
Philadelphia,  Wilmington  and  Bal- 

1,  817,  035 
360  792 

984,729  69 
347  033  55 

942,  817 
3  958,049 

505,781  41 
894,  337  48 

1,  490,  511  10 
1,241,371  03 

West  Jersey  Railroad  

164  937 

134  372  23 

1,731,025 

790,  316  88 

924,  689  11 

Camden  and  Atlantic  Railroad  — 

81,  475 

67,  308  82 

1,  040,  081 

263,  210  47 

330,  519  29 

Total  

15,  738,  326 

12,312,101  78 

28,  677,  297 

8,  554,  464  26 

20,  866,  566  04 

NOTE. — The  above  figures  include  only  the  railroad  business,  tho  earnings  of  Jersey  City 
Tine  Street  (Philadelphia) ,Ferry,  and  Atlantic  City  horse-cars  not  being  included. 


INTERSTATE    COMMERCE.  163 

Statement  of  freight  tonnage  and  earnings  on  the  several  roads  named  below  for  the  year  1884. 


Name  of  road. 

Interstate  traffic. 

Other  traffic. 

Total. 

Tons. 

Earnings. 

Tons. 

Earnings. 

Tons. 

Earning*. 

Northern  Central  Railway 

2,  935,  472 
482,  731 
258,  497 
222.  3-21 

$1,  976,  989  96 
317,  502  32 
13,412  16 
39,  078  90 

4,  854,  997 
290,051 
734 
8,547 

$2,  204,  451  52 
116,  067  59 
101  10 
5,  701  59 

7,  790,  469 
772,  782 
259,  231 
230,868 

$4,  181,  441  48 
433,  569  91 
13,  513  26 
44,  780  49 

Baltimoreand  Potomac  Rail- 

Alexandria  and  Washington 

Alexandria  and  Fredericks- 
burg  Railway  

Total   

3,  899,  021 

2,  346,  983  34 

5,  154,  329 

2,326,321   80 

9,  053,  350 

4,  673,  305  14 

Statement  of  passenger  traffic  and  earnings  therefrom  of  the  several  roads  shown  lelow  for 

the  year  1884. 


Name  of  road. 

Interstate  traffic. 

Other  traffic. 

Total. 

Passengers. 

Earnings. 

Passengers. 

Earnings. 

Passengers. 

Earnings. 

Northern    Central    Rail- 

609,921 
1,  040,  272 
598,  624 
456,693 

$465,  702  51 
592,  961  25 
25,  922  54 
72,  765  14 

3,  342,  132 
502,  771 
1,096 
17,  617 

$553,43267 
76,432  43 
99  12 
8,272  15 

3,  852,  053 
1,543,043 
699,  720 
474,  310 

$1,019,135  1 
669,  393  68 
26,021  66 
81,  037  29 

Bnltimore    and   Potomac 

Alexandria  and  Washing- 

Alexandria   and   Freder- 
icksburg  Railway....... 

Total    

2,  605,  510 

1,;  '7,351  44 

3,  863,  616 

638,  236  37 

6,  469,  126 

1,  795,  587  81 

PEORIA,  DECATUR  AND  EVANSVILLE  RAILWAY. 

George  L.  Bradbury,  general  manager  of  the  Peoria,  Decatur  and 
Evansville  Eailway  Company,  submitted  the  following  report  of  the 
State  and  interstate  traffic  of  that  road  for  the  year  ending  June  30, 
1885,  saying  that  it  "is  a  very  close  approximation,  not  being  able  to 
give  exact  figures": 

Statement  of  traffic   and  revenue  derived  during  year  ending  June  30,  1885. 

FREIGHT. 


Tonnage. 

Revenne. 

Average  earn- 
ings per  ton. 

Tons. 

Per  cent. 

Total. 

Per  cent. 

339,996 
91,  691 

7a76 
21.24 

$259,  188  00 
195,  930  00 

67 
43 

$0.76A 
2.13 

Local............................  ....... 

PASSENGERS. 


Passe 

jgers. 

Reven 

ue. 

Average  earn- 

Nnmher. 

Per  cent., 

Total. 

Per  cent. 

passenger. 

Interstate  

18,  510 

7 

$31,121  64 

21 

$1  68 

Local  

235  036 

93 

259  188  00 

79 

61A 

This  road  has  217  miles  in  Illinois  and  37  miles  in  Indiana. 


164 


INTERSTATE    COMMERCE. 


SAVANNAH,  FLORIDA  AND  WESTERN  RAILWAY. 

W.  B.  McKee,  comptroller,  submitted  the  following  "  statement  of 
freight  tonnage  and  passengers  carried,  with  revenue  derived  from  same, 
over  the  Savannah,  Florida  and  Western  Bailway,  and  the  Charleston 
and  Savannah  Bailway,  showing  proportion  of  same  which  was  interstate 
commerce:" 

SAVANNAH,  FLORIDA  AND  WESTERN  RAILWAY  COMPANY. 


Local. 

Interstate. 

Total. 

Proportion 
of  interstate. 

Tone  freight  transported,  1884  

328,  709 

237,  155 

565,864 

.419 

'Revenue  ^l  884  T  '.  

$749,  307.  14 

$420,  368.  42 

$1,  169,  675.  56 

.359 

Nnmber  of  passengers  carried,  1884  

267,  481 

78,  301 

345,  782 

.226 

Revenue  from  passengers  carried,  1884  ...... 

$324,  587.  98 

$383,  206.  24 

$307,  794.  22 

.641 

CHARLESTON  AND  SAVANNAH  RAILWAY  COMPANY. 


Tons  freight  transported,  1884  

30,  616 

92,542 

123,  158 

.751 

Revenue,  "l884  T  '.  

$68,  004.  96 

$84,  462.  71 

$152,  467.  67 

.553 

Nnmber  of  passengers  carried,  1884  

131,  043 

60,  797 

191,  840 

.316 

$66  013.  76 

$137,  507.  16 

$203,  520.  92 

.675 

SHENANDOAH  VALLEY  RAILROAD. 

G.  B.  W.  Armes,  treasurer  of  the  Shenandoah  Valley  Bailroad  Com- 
pany, submitted  the  following  "  statement  showing  passengers  and  rev- 
enue, local  and  interstate,  carried  over  the  Shenandoah  Valley  Bailroad 
for  the  year  commencing  July  1,  1884,  and  ending  June  30, 1885.  Also 
statement  showing  tonnage  and  revenue,  both  local  and  interstate,  car- 
ried over  the  Shenaudoah  Valley  Bailroad  for  one  year,  beginning  July 
1,  1884,  and  ending  June  30, 1885,"  which  statements  were  prepared  by 
E.  E.  Portlock,  the  auditor: 

Statement  showing  passengers  and  revenue,  local  and  interstate,  carried  by  the  Shenandoah 
Valley  Bailroad  for  the  year  commencing  July  1,  1884,  and  ending  June  30,  1885. 


Month*. 

Local. 

Interstate. 

TotaL 

Passen- 
gers. 

Revenue. 

Passen- 
gers. 

Revenue. 

Passen- 
gers. 

Revenue. 

1884. 

15,103 
20,  959 
14,443 
14,549 
8,092 
9,033 

7,597 
5,725 
7,534 
7,408 
10,  278 
9,934 

$6,  683  30 
14,703  95 
9..7S6  66 
11,252  01 
6,  851  49 
4,  307  09 

6,  141  13 
4,061  50 
6,646  61 
6,  140  72 
6,  873  30 
7,  142  97 

6.7S3 
10,  941 
6,449 
2,524 
1,558 
1,664 

1,956 
1,695 
3,013 
2,919 
3,186 
3,224 

$13,  077  73 
16,  172  62 
12,  256  92 
7,  395  19 
4,  714  25 
6,  325  02 

7,758  50 
6,480  58 
8,  249  72 
10,  291  50 
10,  579  89 
8,  991  09 

21,886 
31,900 
20,  892 
17,  073 
9,650 
10,  747 

9,553 
7,420 
10,  547 
10,327 
13,464 
13,158 

$19,761  03 
30,  876  57 
22,  043  58 
18,647  20 
11,565  74 
10,  632  11 

13,  899  63 
10,  542  08 
14,  896  33 
16,  432  22 
17,453  19 
16,  134  06 

October  .. 

November  

December.  ....................... 

1885. 
January  

Februarv  .  . 

April  .. 

May  

June  

Total  

130,  705 

90,  590  73 

45,  912 

i 

112,  293  01 

176,  617 

202,  883  74 

Percentage  of  passengers,  interstate  to  total. 
Percentage  of  revenue,  interstate  to  total 


26 
58 


INTERSTATE    COMMERCE. 


165 


Statement  showing  tonnage  and  revenue,  both  local  and  interstate,  carried  by  the  Shenandoah 
Falley  Railroad  for  one  year,  beginning  July  1, 1884,  and  ending  June  30,  1885. 


Months. 

Local. 

Interstate. 

TotaL 

Tons. 

Revenue. 

Tons. 

Revenue. 

Tons. 

Revenue. 

1884. 

17,865 
35,  140 
38,566 
33,  596 
22,990 
25,  268 

26,  368 
17,188 
16,  650 
17,  805 
24,  901 
32,  222 

$35,  720  11 
57,  284  43 
68,  403  87 
70,713  17 
38,302  19 
34,040  90 

28,  034  48 
•23,  307  14 
27,403  26 
28,  661  85 
29,  274  97 
35,  188  34 

5,631 
8,860 
11,  923 
10,  393 
9,383 
9,252 

10,  257 
8,295 
7,023 
7,203 
5,947 
5,869 

$21,  799  44 
29,  577  99 
43,  028  73 
38,  496  40 
34,292  36 
33,  074  81 

35,  399  77 
30,  326  39 
27,  554  95 
25,  113  13 
20,  013  91 
20,  589  36 

23,496 
44,*)0 
50,  489 
43,989 
32,  373 
34,  520 

36,  625 
25,483 
23,673 
25,  008 
30,  848 
38,  091 

$57,519  55 
86,  862  42 
111,432  60 
109,  209  57 
72,  594  55 
67,  115  71 

63,  434  25 
53,  633  53 
54,958  21 
53,  774  98 
49,288  88 
55,  777  70 

September  

December  

1885. 
January  

March   

April  

Mav  .  - 

June...  

Total  

308,  559 

476,  334  71 

100,  036 

359,  267  24 

408,  595 

835,  601  95 

Percentage  of  tonnage,  interstate  to  total 24. 6 

Percentage  of  revenue,  interstate  to  total 43 

The  proportion  of  revenue  to  tonnage  being  greater  on  interstate  business  is  due  to  a  longer  haul. 


SOUTHERN  PACIFIC   SYSTEM. 

A.  U.  Towne,  general  manager  of  the  Southern  Pacific  Company,  or 
the  u  Pacific  system,"  including  the  Central  Pacific,  Southern  Pacific, 
and  other  roads,  submitted  the  following  statements  giving  information 
in  regard  to  the  interstate  freight  and  passenger  traffic  on  the  lines  of 
the  company  for  the  year  1884 : 


Commercial 
pounds. 

Amount 

Company 
freight. 

State: 
Freight  originating  in  California  to  points  in  Cali- 
fornia   

3  459  740  380 

$5  347  668  00 

710  313  880 

Interstate: 
Freight  originating  in  California  and  passing  into 
other  States  and  Territories  

490  339  920 

8  415  953  30 

61  791  490 

West-bound  through  freight*  

413  905,730 

2  597  709  90 

State: 
Freight  originating  in  Nevada  to  points  in  Nevada  .  . 
Interstate  : 
Freight  originating  in  Nevada  and  passing  into  other 
States  and  Territories  

<              10,  280 
I       40,  916,  240 

96  316  000 

|         90,  699  70 
164  959  50 

75,  898,  280 
7  166  050 

State  : 
Freight  originating  in  Utah  to  points  in.Utah 

12,425  560 

23  093  60 

34  318  380 

Interstate: 
Freight  originating  in  "Utah  and  passing  into  other 
States  and  1  erritories  

18  936  370 

73  772  50 

93  468  180 

State: 
Freight  originating  in  Arizona  to  points  in  Arizona.  . 
Interstate  : 
Freight  originatingin  Arizona  and  passing  into  other 
States  and  Territories  

19,  866,  690 
74  138  200 

56,  503  00 
73  789  00 

9,  880,  920 
4  677  420 

State: 
Freight  originating  in  New  Mexico  to  points  in  New 
Mexico  ^  

44,833  180 

98  015  20 

2  604  640 

Interstate  : 
Freight  originating  in  New  Mexico  and  passing  into 
other  States  and  Territories  

69  877  430 

106  339  70 

30  373  670 

*  This  freight  originates  in  States  and  Territories  east  of  Ogden  via  Union  Pacific  and  Denver  and 
Rio  Grande  Railroads ;  east  of  Needles,  via  Atlantic  and  PacinY  Railroad ;  east  of  Doming,  via  Atchi- 
spn,  Topeka  and  Santa  Fe  Railroad;  and  east  of  El  Paso,  via  Texas  and  Pacific  and  Galveston,  Har- 
risbnrg  and  San  Antonio  Railroads,  and  passes  through  to  terminal  points  in  California. 


166 


INTERSTATE    COMMERCE. 


Passenger  traffic  of  the  Central  Pacific  Railroad  and  leaned  lines  in  States  of  California,  Ne- 
vada, and  Texas,  and  in  Territories  of  Utah,  Arizona,  and  New  Mexico  for  year  1884. 


Passengers. 

Earnings. 

8,  588,  051 

$3,528,230  01 

Originating  in  and  passing  out  of  California.  

50,  945 

1,  309,  517  37 

Total  

8,  638,  996 

4,837,747  38 

Originating  and  terminating  in  Nevada  ............................... 

21,  124 

59,  933  80 

Originatin1*  in  and  passing  out  of  Nevada  ..............................  

15,  349 

210,  482  95 

Total                   .                     .                                                

36,  473 

270,  416  75 

3,889 

11,  625  65 

Originating  in  and  passing  out  of  Utah.  

4,007 

149.918  5C 

Total..  .             

7,896 

161,544  15 

13,  066 

75,  343  90 

Originating  in  and  passing  out  of  Arizona  .................................. 

7,154 

209,  613  66 

Total  „  

20,  220 

284,  957  56 

Originating  and  terminating  in  New  Mexico  .........  ...................  

2,700 

12,  824  00 

Originating  in  and  passing  out  of  New  Mexico*    .        .     ..  ................ 

4,  025 

77,  600  36 

Total  

6,725 

90,  424  36 

Originating  at  El  Paso  and  passing  westward  out  of  Texas  

3,106 

89,  476  73 

Total  passenger  traffic  originating  in  above  named  States  and  Terri- 
tories    -  

8,  713,  416 

5,  734,  566  93 

"Westward-bound  through  passenger  traffic  : 
Originating  east  of  Oguen  and  terminating  in  California.  

33,  238 

821,  160  38 

Originating  east  of  Ogden  and  terminating  in  Nevada.  

992 

20.  827  37 

Originating  east  of  Ogden  and  terminating  in  Utah.  

64 

302  56 

Total  via  Ogden    .                  ..                        ..      

34,  294 

842,290  31 

Total  via  the  Needles  and  terminating  in  California                     

5,912 

89,  863  57 

9,568 

276,  937  96 

1,198 

22,  634  21 

49 

282  91 

Total  via  Deming  

10,  815 

299,  855  08 

Originating  east  of  El  Paso  and  terminating  in  California  ...........  

8,493 

249,661  57 

Originating  east  of  El  Paso  and  terminating  in  Arizona  

327 

7,  941  98 

Originating  east  of  El  Paso  and  terminating  in  New  Mexico  

596 

2,391  50 

Total  via  El  Paso  .-  ,  

9,416 

259,  995  05 

Total  west-bound  through  traffic  terminating  in  above-named  States 
and  Territories  

60,  437 

1,492,004  01 

Total  passenger  traffic  over  Central  Pacific  Railroad  and  leased  linesin  year 
1884  

8,  773,  853 

7,  226,  570  94 

TOLEDO,   CINCINNATI  AND  SAINT  LOUIS  RAILROAD. 

C.  S.  Anthony,  auditor  of  the  Toledo,  Cincinnati  and  Saint  Louis  Kail- 
road,  furnished  the  following  statement  showing  the  amount  of  inter- 
state business  done  by  that  road  during  the  year  ending  June  30, 1885 : 


Revenue. 

Total 

Local 

Interstate. 

Passenger  ........  

*  114,  865  70 
179,  844  11 

$8,  255  25 
96,  316  55 

$123,  120  95 
276,  160  6« 

Freight  ... 

INTERSTATE    COMMERCE.  1G7 


COMPETITION  BETWEEN"  WATER-WAYS  AND  RAILROADS 
—WATER  ROUTES  THE  MOST  EFFECTIVE  REGULATORS 
OF  RAILWAY  CHARGES— THE  EMANCIPATION  OF  THE 
WATERS  A  NATIONAL  NECESSITY. 

The  committee  was  directed  by  the  Senate  to  report  upon  the  sub- 
ject of  transportation  by  water  routes  in  connection  or  in  competition 
with  railroads,  and  throughout  the  entire  investigation  attention  lias 
been  given,  in  a  general  way  at  least,  to  the  relations  of  the  water- 
routes  of  the  United  States  to  the  question  of  transportation,  and  espe- 
cially as  to  the  extent  to  which  they  affect  and  regulate  railroad  charges. 
The  amount  of  labor  imposed  upon  the  committee  in  connection  with 
the  other  branches  of  its  inquiry  has  made  it  impracticable  to  thor- 
oughly investigate  the  subject  of  transportation  by  water  or  the  various 
systems  of  internal  improvements  which  the  General  Government  is 
asked  to  undertake,  but  the  testimony  collected  will  be  found  to  con- 
tain valuable  information  as  to  the  importance  of  maintaining  and  de- 
veloping a  national  system  of  internal  water  communication  as  the 
most  certain  and  effective  method  of  regulating  railroad  rates  and  of 
insuring  to  the  people  the  advantages  of  cheap  transportation. 

Attention  is  invited  to  the  concurrence  of  views  upon  these  questions 
indicated  in  the  testimony,  and  a  i'ew  extracts  are  here  given  from  the 
opinions  expressed  to  the  committee  in  order  to  reflect  the  public  senti- 
ment upon  the  subject. 

Mr.  Albert  Fink,  in  his  capacity  as  commissioner  of  the  Associated 
Trunk  Lines,  has  for  years  been  dealing  with  the  matter  of  establishing 
railroad  rates,  and  has  had  occasion  to  appreciate  the  influence  of  wa- 
ter competition.  He  testifies  that  the  Mississippi  River  is  an  important 
regulator  of  railroad  transportation  rates,  and  says  : 

Under  ordinary  circumstances  the  Lake,  the  Erie  Canal,  and  Mississippi  River  are 
the  great  regulators  of  railroad  transportation  charges.  (Testimony,  p.  1'23.) 

Mr.  Simon  Sterne  said: 

It  unquestionably  is  important  that  the  Government  should  maintain  a  system  of 
water-routes.  The  rate  of  charges  on  the  Erie  Canal  largely  determines  the  railway 
rate  all  the  year  round  throughout  the  United  States.  The  rate  from  New  York  to 
Chicago  is  substantially  the  pattern  rate  for  charges  throughout  the  country,  and  that 
rate  from  New  York  to  Chicago  is  largely  rixed  by  competition  with  the  caual ;  and 
under  these  circumstances  the  only  one  other  element  of  competition  we  have  is  that 
of  our  internal  water-routes,  which  to  care  for  and  develop  I  claim  to  b«  one  of  the 
first  functions  of  the  Government.  (Testimony,  p.  80.) 

Mr.  F.  B.  Thurber  said,  in  his  statement : 

Canals  should  be  modernized.  For  twenty-five  or  thirty  years  they  have  remained 
just  as  they  were.  *  *  The  water  lines  are,  I  may  say,  the  salvation  of  this 
country,  and  should  be  developed  and  extended  in  every  possible  way.  While  enor- 
mous improvements  have  been  made  in  railroad  transportation  during  the  past  twen- 
ty years,  little  or  no  improvements  nave  been  made  in  our  system  of  American  water- 
ways. Steel  rails,  more  powerful  locomotives,  improved  freight  cars  which  will 
carry  two  tons  of  paying  freight  for  each  ton  of  dead  weight  in  rolling  stock,  as 
against  the  old  rule  of  ton  for  ton,  improved  methods  of  handling  freight,  improved 
signals  and  labor-saving  appliances  in  every  department  of  railroad  operation,  have 
enormously  reduced  the  cost  of  railroad  transportation  during  the  past  two  decades, 
\vhilelittleornothinghasbeendonetoimproveoursystein  of  waterways.  This  is 
doubtless  largely  to  be  attributed  to  the  adverse  influence  of  railroad  corporations  in 
legislation. 

In  Pennsylvania  and  other  States  they  have  bought  up  the  canals  and  abolished 
them.  Whenever  a  river  and  harbor  bill  is  pending  in  Congress  the  railroad  repre- 
sentatives will  vote  millions  for  improvements  which  do  not  materially  affect  them, 


168  INTERSTATE    COMMERCE. 

but  when  it  conies  to  an  item  like  the  Hennepin  Canal,  which  promises  to  be  of  value  in" 
extending  our  system  of  water-ways,  the  railroad  representatives,  whether  Democrats 
or  Republicans,  are  found  voting  solidly  against  it.  Can  there  be  any  better  illustra- 
tion of  the  necessity  for  the  people  to  insist  upon  the  extension  and  improvement  of 
our  country's  water-ways  ?  *  *  *  Our  canals,  connecting  the  great  lakes  with  the 
ocean,  which  are  really  national  highways,  ought  to  bo  as  much  a  recipient  of  the  na- 
tional bounty  as  the  isolated  trout  streami,  muddy  bayous,  and  petty  harbors  for 
which  liberal  appropriations  are  provided  each  year  in  the  river  and  harbor  bill.  A 
comprehensive  system  of  improving  our  principal  water-ways  should  be  undertaken 
upon  a  scale  which  will  enable  steam,  the  great  motive  power  of  the  world,  to  be  ad- 
vantageously used,  and  thus  reduce  the  cost  of  water  transportation  in  the  same  pro- 
portion that  the  same  motor  has  reduced  the  cost  of  transportation  on  laud.  (Testi- 
mony, pp.  283-4). 

Mr.  Charles  Kandolph,  for  many  years  secretary  of  the  Chicago  Board 
of  Trade,  said,  in  his  paper: 

I  hardly  need  enter  on  a  discussion  of  the  importance  of  the  Government's  aiding 
in  developing  the  fullest  capacity  of  water-ways  wherever  practicable.  These  more 
than  anything  else  tend  to  cheapen  freight  rates,  and  their  influence  is  felt  at  points 
far  removed  from  their  course.  (Appendix,  p.  62.) 

Mr.  Charles  Bidgely,  president  of  the  Springfield  Iron  Company,  said : 

I  do  not  think  that  too  much  emphasis  can  be  given  to  the  importance  of  developing 
and  maintaining  a  system  of  water  routes  for  the  transportation  of  freight  in  the  West. 
All  of  the  freight  rates  in  this  section  of  country  have  always  been  controlled  pri- 
marily by  the  rates  on  the  Great  Lakes  and  the  Mississippi  River.  The  influence  of 
these  great  water-ways  in  fixing  rates  has  been  as  beneficial  as  it  has  been  constant. 
A  similar  influence  has  been  exerted  by  the  cauala,  and  this  can  be  extended  and  in- 
creased by  the  opening  of  new  canals  in  such  directions  as  will  bring  large  and  impor- 
tant scopes  of  territory  under  their  influence.  The  cost  of  such  improvements  would 
come  back  to  the  people  many  times  over,  in  the  reduced  rates  of  freight  which  they 
would  secure,  even  if  all  the  freight  went,  as  now,  by  rail,  and  the  canals  were  unused. 
(Appendix,  p.  68.) 

In  the  paper  submitted  by  the  Toledo  Produce  Exchange,  the  follow- 
ing statement  will  be  found : 

The  great  water  routes  of  this  country,  which  are  being  improved  yearly  by  the 
General  Government,  and  on  which  transportation  is  thereby  cheapened,  are  nature's 
highway  for  the  great  agricultural  country  West  and  Northwest.  It  has  been  here- 
tofore, and  must  continue  to  be,  the  great  regulator  of  rates  of  transport  of  the  heavy 
commodities  passing  east  and  west.  Without  this  potential  and  conservative  element 
rates  of  freight  would  at  .once  be  enhanced  and  Western  values  depreciated.  By  a 
free  water  navigation  of  1,000  miles  grain  is  transported  at  6  cents  per  bushel,  and 
against  that  no  railway  can  compete.  And  yet  there  is  no  antagonism  between  the 
railways  and  the  water.  The  grain  products  of  the  country,  lumber,  timber,  staves, 
and  coal,  seek  the  water  in  the  season  of  navigation,  while  flour,  provisions,  live  stock, 
and  the  great  and  growing  variety  of  other  products  seek  the  rail,  and  under  fair  rates 
of  freight  the  railways  have  prospered  during  that  period  as  highly  as  in  any  other. 
The  necessity  of  this  water  transportation  is  more  directly  realized  in  the  very  active 
competition  that  now  exists  between  the  agriculturists  of  this  country  and  those  of 
India,  Australia,  Russia,  &c.  In  supplying  the  wants  of  the  importing  states  of  the 
Old  World,  and  in  this  contest,  every  one-fourth  of  a  centper  bushel  counts.  (Appen- 
dix, p.  73.) 

General  George  B.  Wright,  of  Indianapolis,  expressed  his  opinion  as 
follows : 

It  is  undoubtedly  for  the  interest  of  the  country  and  the  people  that  the  water 
routes  should  be  maintained  and  further  developed"  as  the  necessities  of  the  country 
may  require.  They  are  very  powerful  in  their  conservative  influence  upon  the  rates 
of  fare  and  freights  of  railroad  companies.  As  the  country  improves  and  increases 
in  population  these  lines  of  communication  will  become  in  many  localities  more  and 
more  important.  It  is  the  cheapest  means  of  transportation  that  can  be  had  in  many 
parts  of  the  country,  and  in  many  places  the  people  are  wholly  or  in  part  depend- 
ent upon  them.  While  they  are  rivals  or  competitors  in  many  cases  of  the  railroad 
companies,  that  fact  need  not  be  a  serious  injury  to  the  general  railroad  interests. 
They  are  often  used  in  connection  with  railroads  in  forming  lines  of  through  traffic, 
and  can  be  used  to  great  advantage  in  transporting  many  articles  of  commerce  that 
will  not  always  bear  transportation  by  all  rail.  (Appendix,  p.  9^.) 


INTERSTATE    COMMERCE.  169 

The  position  of  the  Anti-Monopoly  League  of  New  York  is  shown  in 
'he  following  statement : 

It  is  found  that  those  of  its  waterways  which  are  sustained  at  public  expense  and 
open  to  common  use  free,  yield  the  most  satisfactory  results,  and  the  steady  gravita- 
tion ill  this  and  all  countries  is  to  such  free  use. 

The  waterways  furnish  the  cheapest  rate,  and  affect  and  regulate  railway  rates  most 
favorably  in  the  interest  of  the  shipper,  and  being  open  on  common  terms  to  all  who 
choose  to  use  them  need  no  other  legislation  than  will  make  them  free  and  secure,  ac- 
cess to  them  to  all  users  alike  ;  it  is  necessary  that  sufficient  landings  should  be  acces- 
sible to  all  upon  the  same  and  reasonable  practicable  conditions.  (Appendix,  p.  106.) 

J.  J.  Woodman,  master  of  the  National  Grange,  declares  that — 

Water  routes  are  nature's  great  thoroughfares,  and  it  should  be  a  fixed  policy  of  the 
Government  to  keep  the  channels  of  these  great  arteries  open,  that  the  life  blood  of 
commerce  may  flow  freely.  Water  routes  are  indispensable  in  maintaining  cheap 
transportation.  (Appendix,  p.  109.) 

Isaac  H.  Sturgeon,  of  Saint  Louis,  who  for  many  years  was  engaged 
in  constructing  and  operating  railroads,  after  speaking  of  the  impor- 
tance of  developing  and  maintaining  a  system  of  inland  water  routes, 
refers  as  follows  to  other  national  enterprises: 

Permit  me  to  say  in  this  connection  that  I  feel  that  the  interests  of  the  country  de- 
mand the  construction  of  a  canal  to  connect  the  Illinois  River  with  the  lakes  at  Chi- 
cago, which  would  give  the  country  west  of  Saint  Louis  a  water  route  east  as  well  as 
south  by  the  Mississippi  River;  and  may  I  submit  further  for  your  thought  the  great 
and,  as  it  seems  to  me,  overwhelming  importance  of  the  earliest  possible  construction 
of  a  free  ship-canal  by  our  Government  across  the  Isthmus  of  Panama,  free  to  the 
vessels  of  the  United  States,  with  a  reasonable  charge  on  foreign  tonnage.  Let  us 
build  and  own  and  control  this  canal,  free  from  all  entangling  alliances,  as  a  gift  to 
our  maritime  tonnage.  I  am  confident  it  would  be  wise,  and  would  do  more  to  enable 
our  country  to  successfully  compete  with  the  commerce  of  Asia,  Australia,  and  the 
islands  of  the  Pacific  Ocean  than  anything  else  we  could  do. 

If  I  read  the  news  aright,  at  this  day  the  European  powers  are  considering  the 
question  of  making  the  Suez  Canal  free  ;  but  whether  so  or  not,  it  is  clearly  our  in- 
terest, as  it  seems  to  me,  to  build  this  canal  with  the  least  possible  delay,  so  as  to 
accommodate  the  largest  vessels  with  the  fewest  possible  number  of  locks  and  dams, 
thereby  at  once  giving  access  to  our  vessels  to  all  the  west  coast  of  North  and  South 
America,  the  people  of  the  islands  of  tbo  Pacific  Ocean,  Australia,  and  Asia.  The 
construction  of  this  free  ship-canal  would,  by  cheapening  the  rates  of  freights  espe- 
cially, give  to  our  country  greater  advantages  than  the  imagination  can  well  compre- 
hend. • 

I  think  it  is  well  understood  that  the  building  of  our  first  transcontinental  railway 

Precipitated  the  building  of  the  Suez  Canal  as  a  counter-project,  which,  owing  to  the 
igh  rates  of  freights  maintained  over  our  Pacific  roads,  causes  all  commerce  for  Eu- 
rope and  our  own  country  to  take  that  route,  as  it  is  cheaper  and  more  expeditious. 
Give  us  the  free  ship-canal  and  we  may  hope  to  fully  realize  the  benefit**  that  we  ex- 
pected to  accrue  to  us  from  the  building  of  our  transcontinental  railways,  but  in 
•which  we  have  largely  been  disappointed.  (Appendix,  pp.  164-5.) 

Hon.  Thomas  Updegratf,  of  McGregor,  Iowa,  says : 

The  history  of  transportation  between  Chicago  and  the  seaboard  establishes  the 
value  of  water  routes.  The  water  routes  from  the  Atlantic  to  Chicago  should  be  ex- 
tended to  the  Mississippi  by  means  of  the  Hennepin  or  other  similar  canal  at  what- 
ever cost ;  and  wherever  a  water  routo  can  be  developed  which,  in  proportion  to  its 
cost,  can  offer  to  railroads  one-half  of  the  competition  of  which  such  a  canal  as  the 
Henuepin  is  capable,  it  should  be  opened  and  maintained  by  the  General  Government. 
The  bulk  of  interstate  commerce  runs  in  a  few  general  directions  converging  on  to  a 
very  few  lines.  If  the  General  Government  can  by  a  few  water  routes  give  relief 
here,  may  not  the  States,  constitutionally,  be  equal  to  what  ia  left  to  be  done  T  I 
have  more  faith  in  water  routes  as  cheapeuers  of  transportation  on  interstate  com- 
merce than  in  all  other  suggested  means.  (Appendix,  p.  1H8.) 

Henry  C.  Haarstick,  president  of  the  Saint  Louis  Merchants'  Ex- 
change, referring  to  the  transportation  of  freights  on  the  Mississippi 
River  and  the  railroads  running  south  from  Saint  Louis,  stated  that — 

The  river  usually  makes  the  rate.  The  railroads  try  to  get  the  difference,  between 
the  river  rates  with  the  insurance  added.  They  make  it  that  much  higher.  The 


170  INTERSTATE    COMMERCE. 

river  carries  more  than  three-fourths  of  all  the  business  from  Saint  Louis  to  New 
Orleans,  for  NVw  Grit-ana  proper.  When  it  comes  to  points  east  of  that,  and  it  haa 
to  be  reshippetl  to  New  Orleans,  then  the  river  does  not  carry  as  much,  because  that 
is  tinder  the  control  of  the  railroads,  and  they  can  make  their  rates  accordingly. 
(Testimony,  p.  b61). 

Jabez  Burrows,  a  former  in  Nebraska,  expressed  the  conviction  that — 

There  is  no  question  whatever  but  that  the  maintenance  of  water  routes  would  be 
of  immense  value  to  this  Western  country,  because,  while  it  would  be  a  very  valuable 
thing  for  us  to  become  manufacturing  States,  we  are  for  a  long  time  going  to  be  ex- 
porting States  of  agricultural  products.  As  such,  the  low  rate  to  the  seaboard  and 
to  foreign  countries  is  of  vast,  importance  to  us. 

Senator  HARRIS.  Valuable  not  only  as  a  means  of  transportation,  but  as  a  regu- 
lator of  railroad  transportation  ? 

Mr.  BURROWS.  Yes,  sir;  I  believe  the  Henuepin  Canal,  if  it  is  practicable,  if  there 
is  a  feeder  at  the  highest  point  that  would  make  it  a  practicable  canal,  should  be 
constructed  by  the  General  Government.  It  would  give  us  water  transportation  from 
the  Mississippi  River  to  the  East.  Of  course  it  would  open  an  immense  exit  out  of 
the  Mississippi  Valley.  (Testimony,  p.  1179.) 

Oliver  Dalryinple,  the  great  Dakota  wheat-raiser,  made  the  following 
statement : 

I  would  regard  the  waterways  of  the  country  as  the  people's  highways,  and  I 
would  follow  the  example  of  Canada  in  opening  the  Saint  Lawrence  from  Quebec  up  ' 
to  Montreal.  I  would  make  the  Erie  Canal  a  national  work.  I  would  enlarge  it  and 
deepen,  it,  and  make  it  a  national  property  instead  of  a  State  property,  and  give  an 
uninterrupted  commerce  from  the  West  to  the  East  that  would  make  it  impossible 
for  Mr.  Vauderbilt  or  any  other  man  to  double  or  quadruple  his  stock  by  watering  or 
any  other  process.  I  would  meet  the  great  corporations  of  the  country  in  that  way. 

The  CHAIRMAN.  When  you  did  that,  would  that  be  sufficient  ? 

Mr.  DALRYMPLE.  Just  as  long  as  we  can,  as  now,  carry  freight  on  the  great  water 
courses  of  the  country  at  a  mill  a  ton  per  mile  we  can  beat  with  the  steam-barge  the 
steel  rail,  which  costs  a  cent  a  ton  a  mile  to  move  the  freight.  We  do  not  ask  any 
odds.  We  can  take  care  of  ourselves.  The  agriculturist  of  the  West  can  lay  his  prod- 
ucts down  into  the  hands  of  the  consumer  as  against  the  great  corporations  of  the 
country.  (Testimony,  p.  1332.) 

THE    EFFECT   OF    WATER    COMPETITION    UPON    RAILROAD    CHARGES. 

The  evidence  before  the  committee  accords  with  the  experience  of  all 
nations  in  recognizing  the  water  routes  as  the  most  effective  cheapeners 
and  regulators  of  railway  charges.  Their  influence  is  not  confined  with- 
in the  limits  of  the  territory  immediately  accessible  to  water  communi- 
cation, but  extends  and  controls  railroad  rates  at  such  remote  and  in- 
terior points  as  have  competing  lines  reaching  means  of  transport  by 
water.  Competition  between  railroads  sooner  or  later  leads  to  combina- 
tion or  consolidation,  but  neither  can  prevail  to  secure  unreasonable 
rates  in  the  face  of  direct  competition  with  free  natural  or  artificial  water 
routes. 

The  conclusion  of  the  committee  is,  therefore,  that  natural  or  arti- 
ficial channels  of  communication  by  water,  when  favorably  located,  ade- 
quately improved,  and  properly  maintained,  afford  the  cheapest  method 
of  long-distance  transportation  now  known,  and  that  they  must  con- 
tinue to  exercise  in  the  future,  as  they  have  invariably  exercised  in  the 
past,  an  absolutely  controlling  and  beneficially  regulating  influence 
upon  the  charges  made  upon  any  and  all  other  means  of  transit. 

THE   ERIE    CANAL. 

Governor  Horatio  Seymour,  of  New  York,  whose  letter  will  be  found 
on  page  46  of  the  Appendix,  referring  to  the  Erie  Canal,  says  : 

The  tonnage  of  the  canal  has  not  been  much  increased  by  the  policy  of  low  tolls  or 
no  tolls,  but  the  cost  of  carrying  grain  from  Chicago  to  New  York  is  cut  down  to 
about  one-third  of  the  former  charges.  *  *  * 

It  is  strange  that  many  regard  with  complacency  plans  lor  ship-canals  which  will 
enable  vessels  to  sail  around  our  country  from  New  York  to  California,  only  touching 


INTERSTATE    COMMERCE. 


171 


at  a  few  point,  while  they  denounce  Improvements  across  our  eountiy,  giving  pros- 
perity  to  sill  points  on  their  lines  in  our  own  country,  while  the  ship-canals  across 
the  isthmus  are  for  the  benefit  of  other  lands  a.s  well  as  our  own. 

Canals  as  regulators  of  transportation  will  soon  be  appreciated.  Water  routes  are- 
the  only  reliable  protections  against  undue  charges  for  carrying.  The  people  will 
soon  learn  that  fact. 

In  this  letter  Governor  Seymour  refers  to  one  published  by  him  two 
years  ago,  in  which  he  quoted  the  following  tables  from  the  reports  of 
the  Bureau  of  Statistics,  and  said  : 

In  thirty-eight  years  before  1876  our  exports  to  Europe,  with  sonic  exceptions,  were 
less  than  our  imports.  When  by  a  series  of  reductions  \\c  cut  down  the,  tolls  TO  a  low 
rate,  which  reductions  were  followed  by  the  railroads  and  other  routes,  our  exports 
were  enormously  increased.  *  *  *  The  following  tables  show  the  balance  of 
trade  against  us  before  tolls  were  cut  down  and  the  balance  in  our  favor  since  the 
low-tolls  policy  was  adopted: 


Year. 

Balance  of  trade  apainst  us  from  1866  to 
1875  under  high  tolls. 

Year. 

Value  of  the  exports  and    imports 
with  low  tolls. 

Exports. 

Imports. 

Excess  of  im- 
ports ove. 
exports. 

Exports. 

Imports. 

Excess  of  ex- 
ports   over 
imports. 

1866. 
lf-67.     . 
1868.     . 
1869.     . 
1870.     . 
1871.     . 
1872.     . 
1873.     . 
1874 

$348,  850,  522 
294,  506,  141 
281,952,809 
286,  117,  697 
391',  771,  768 
442,820,  178 
4-14,  177,  :>Mi 
522,  479,  922 
586  283  040 

$434,812,066 
395,  761,  096 
357,  436,  440 
417,506,379 
435,  9J8,  408 
520,  223,  684 
626,  595,  077 
012,  136,210 
-,67  406  34° 

$85,  952,  544 
101,  284,  955 
75,  483,  541 
131,  388,  682 
43,  IsC,  6-Jd 
77,  403,  506 
182,417,491 
119,  656,  288 

1876... 

$540,  384,  671  $460,  741,  190 
002,475,220    451,  323,  ]2G 
694,  865,  766   437,  051,  532 
710,439,441    445,777,775 
>•  :i:>.  638,  658   607,954,746 
902.  377,  :;  46    042,  604,  628 
750,  542,  257    724,  639,  574 
823,  839,  402   723,  180,  914 

$79,  643.  481 
151,  145,  US4 
257,  814.  234 
264,661,660 
167,683,912 
259,712,718 
25,  902,  C8J 
100,  658,  488 

1877  
1878 

1879  . 

1880  .... 

1881  
18D2  
1883  (9  mo) 

1875.... 
Bah 

513,442,711 
ncc  against  us 

533,  005,  436 
in  tea  years.. 

19,  562,  725 

1,  307,  229,  278 

836,  306,  372 
18,  876,  698 

817,  429,  674 

There  was  an  excess  of  exports  over  imports  in  1874  ol  $18,876,668.  Balance  in  favor  of  this  country, 
$1,307,229,276  under  low  tolls. 

The  reasons  for  this  great  change  in  our  favofr  will  be  seen  by  looking  at  the 
changes  in  freight  rates  during  the  past  sixteen  years.  Average  freight  charges  per 
bushel  for  transportation  of  wheat  frour  Chicago*  to  New  York  since  the  year  Ife68, 
and  also  from  New  York  to  Liverpool  for  the  same  time: 

Average  rates  per  bwhel. 


Year. 

Chicago  to  New 
York. 

New  York  to  Liverpool. 

By  lake 
and  canal. 

By  lake 
and  rail. 

By  all 

rail. 

Steamer 
rates. 

Sailing- 
vessel 
rates. 

1868  

25.3 
24.1 
17.5 
21.6 
26.6 
19.2 
14.2 
11.4 
9.7 
7.5 
10.1 
13.0 
13.2 
8.6 
8.7 
*9.  16 

29.0 
25.0 
22.0 
25.  0 
28.0 
26.9 
16.9 
14.6 
11.8 
15.8 
11.4 
13.3 
15.7 
10.4 
10.9 
*12.  0 

42.6 
35.1 
33.3 
31.0 
33.5 
33:2 
28.7 
24.1 
16.5 
20.3 
17.7 
17.3 
19.7 
14.4 
14.6 
*16.  1 

14.36 
12.98 
11.56 
16.  32 
15.28 
21.12 
18.16 
16.14 
16.04 
13.86 
15.22 
12.40 
11.70 
8.16 
7.76 
*0.08 

1869  .         .     . 

1870  

1871  

1872  

1873  

19.82 
15.66 
14.24 
15.28 
13.  52 
14.18 
11.80 
10.20 
9.50 

1874  

1875  

1876  

1877  

1878  

1879  

1880  

1881  

1882 

1883     

112.50 

*  January  1  to  November  1.  t  Six  months,  January  1  to  July  1. 


172 


INTERSTATE    COMMERCE. 


This  table  shows  that  the  water  routes  have  always  led  in  reductions.  The-lake  and 
canal  rates  include  charges  at  Buffalo.  Since  1868  the  freight  charges  for  a  bushel  of 
grain  from  Chicago  TO  Liverpool  have  been  cut  down  over  20  cents. 

*  *  *  A  false  and  mischievous  idea  has  grown  up  in  our  country  that  Europe  de- 
pends upon  us  for  food.  This  is  uot  true.  They  can  get  all  they  want  from  many 
parts  of  the  world;  from  India.  South  America,  and  Australia.  In  South  America 
vast  herds  of  cattle  are  killed  merely  for  their  hides.  The  carcasses  are  left  to  decay. 
Great  Britain,  which  buys  more  of  our  provisions  than  any  other  country,  is  building 
railroads  in  Northern  India  to  cheapen  transportation,  and  is  sending  farming  tools 
into  that  region  to  improve  its  agriculture'.  This  policy  has  been  followed  by  a  great 
increase  in  its  production  of  grain.  Within  a  few  years  the  exports  of  wheat  from 
India  have  grown  up  to  many  millions  of  bushels.  The  governments  of  Europe  are 
trying  to  lessen  onr  exports  as  they  give  us  such  heavy  balances  against  them.  For 
this  reason,  Germany  and  France  shut  out  our  pork,  and  other  governments' show 
great  uneasiness,  as  we  disturb  their  relationship  to  their  people.  Our  only  course 
is  to  undersell  other  countries ;  as  labor  is  higher  here  than  elsewhere,  we  must  de- 
peud  upon  smaller  charges  for  carrying.  That  region  is  fast  becoming  one  of  our 
strong  competitors.  Wf  only  sell  to  Europe  because  we  have  cheaper  modes  of  send- 
ing our  products  to  their  markets.  We  have  been  able  to  do  this  because  we  have 
cut  down  the  cost  of  carrying.  Our  exports  grow  up  as  carrying  rates  are  cut  dowu. 
Railroads  have  always  followed  lower  races  upon  water  routes,  but  the  last  are  the 
cheapest,  as  is  shown  by  the  table  of  rates  in  the  report  on  commerce  and  navigation 
of  the  General  Government.  Our  agricultural  interests  are  the  most  important  of  all. 
When  water  routes  are  closed  by  winter,  railroad  rates  go  up;  when  they  are  opened 
in  spring,  rail  rates  go  down.  *  *  *  We  are  now  able,  if  we  are  wise,  to  overcome 
the  greater  cost  of  production  in  our  country,  owing  to  our  higher  wages,  by  our 
cheaper  transportation.  We  are  to  have  a  hard  struggle  to  keep  our  lead  as  a  food- 
supplying  country,  and  we  must  give  up  the  delusion  that  Europe  depends  upon  us 
for  food.  It  will  only  buy  of  us  if  we  can  deliver  it  to  them  at  the  lowest  cost.  The  de- 
lusion that  the  Old  World  depen  is  upou  us  for  food  stimulates  extravagance  in  Con- 
cress  and  corruption  in  legislatures.  If  we  fail  to  uphold  pur  water  routes  as  pro- 
jection against  unjust  and  unwise  charges  for  transportation,  we  shall  suffer  in  the 
future. 

It  appears  from  the  report  of  the  State  engineer  of  New  York  (Jan- 
uary 20,  1885),  that  during  1884  the  average  rate  of  freight  on  the  New 
York  Central,  the  Erie,  and  the  West  Shore  Railroads  was  .740  of  a  cent 
per  ton  per  mile,  against  .845  of  a  cent  per  ton  in  1883,  while  the  average 
rate  of  canal  freight  was  .270  of  a  cent  per  ton  per  mile  against  .340  of  a 
cent  per  ton  in  1883.  The  figures  given  show  that  the  business  of  the 
canals  shared  in  the  depression  common  to  all  industrial  movements 
and  enterprises  during  1884.  Not  only  did  the  volume  of  canal  freight 
diminish,  but  the  rates  of  freight  were  unprecedentedly  low,  and  in  both 
these  respects  the  canal  business  suffered  in  common  with  the  railroads 
which  compete  for  the  same  freights,  in  consequence  of  the  railroad 
warfare,  which  brought  into  effect  the  lowest  freight  tariff  ever  known. 

The  report  in  question  contains  the  following  table,  showing  the  an- 
nual tonnage  of  the  Erie  Canal  and  of  the  railroads  competing  with  the 
canal  for  a  period  of  twenty  years : 


Tear. 

Canal. 

Eailroads. 

Tear. 

Canal. 

Railroads. 

1865  

Tons. 
4  729  654 

Tons. 
3  609  640 

1875  

Tow. 
4,  859,  858 

Tons. 
12,  241,  900 

1866  

5  775  2'>0 

4  844  !i-;i 

1876  

4,  172,  129 

12,  776,  498 

1867  

5  688  325 

5  15°  472 

1877  

4,  955,  963 

12,533,807 

1868  

6,442  225 

5  754  842 

1878  

5,  171,  320 

13,  845,  981 

1869  

5  859  080 

6  594  094 

1879    

5,  362,  372 

17,  228,  394 

1870  

6  173  769 

8  974  505 

1880    

6,  457,  652 

19,  248,  930 

1871  

6  467  888 

9  376  264 

1881 

5,  179,  192 

22,  078,  202 

1872  

6  673  370 

9*  958  239 

1882 

5,  467,  423 

23,  225,  C31 

1873  

7  364  782 

11  835  426 

1883 

5  664,  056 

24,  503,  063 

1874  

5  804  588 

12,478  954 

1884 

5,  009,  488 

22,  123,  895 

INTERSTATE    COMMERCE.  173 

In  explanation  of  these  statistics  the  State  engineer  says: 

It  must  bo  borue  in  mind  that  the  average  haul  of  rail  freights  is  much  shorter 
than  those  by  canal ;  the  former  on  tho  through  New  York  lines  average  considerably 
less  than  200  miles,  while  the  canal  freights,  being  mostly  through,  are  at  least  twice 
as  long,  so  that  a  table  of  gross  tonnage  does  not  fairly  represent  the  comparative 
business  of  the  routes  and  favors  the  railroads  to  the  extent  of  about  50  per  cent. 

The  State  of  New  York,  having  made  the  Erie  Canal  free  to  all  com- 
merce, both  interstate  and  State,  is  now  engaged  in  a  discussion  as  to 
the  propriety  of  further  improving  and  enlarging  the  canal.  A  canal 
convention,  called  for  the  purpose  of  considering  various  plans  for 
enlarging  and  improving,  was  held  at  Utica  iu  August  last,  at  which, 
after  full  consideration  of  the  whole  question,  it  was  decided  to  urge 
upon  the  State  Legislature  the  necessity  of  proceeding  to  enlarge  and 
improve  the  Erie  Canal  by  doubling  the  length  of  the  present  locks 
and  deepening  the  channel.  By  this  improvement  two  boats,  running 
together  as  consorts,  can  be  locked  through  at  the  same  time,  thereby 
greatly  shortening  the  time  between  Buffalo  and  the  Hudson  River. 
By  deepening  the  channel  one  foot,  each  boat  can  be  made  to  carry  a 
much  larger  load  and  thus  materially  reduce  the  cost  of  transportation 
through  the  canal.  By  some  it  is  believed  that  the  cost  can  be  reduced 
fully  fifty  per  cent,  but  as  to  this  the  committee  is  not  able  fully  to 
judge,  but  it  has  no  doubt  that  the  proposed  improvement  will  be  of 
very  great  benefit  to  commerce  passing  through  the  canal.  The  plan  as 
proposed  is  considered  to  be  entirely  feasible  l>y  the  best  engineers  who 
are  acquainted  with  the  Erie  Canal.  Many  of  the  citizens  of  New  York 
believe  that  the  Federal  Government  should  pay  the  cost  of  this  i'n- 
provenient,  and  also  a  considerable  portion  of  the  yearly  expense  of  the 
Erie  Canal,  so  long  as  it  is  maintained  free  to  all  the  commerce  of  the 
country.  Upon  this  point  the  committee  does  not  feel  called  upon  to 
express  an  opinion. 

THE  MISSISSIPPI  RIVER  AND  ITS  TRIBUTARIES. 

The  importance  of  improving  the  Mississippi  River  and  its  navigable 
tributaries  is  so  fully  appreciated  by  the  people  and  has  been  recognized 
in  so  many  substantial  ways  by  Congress  that  it  has  not  been  deemed 
advisable  by  the  committee  to  enter  upon  the  consideration  of  the  sub- 
ject. All  needed  information  concerning  these  river  improvements  is 
accessible  in  the  official  reports  of  those  connected  with  the  work  of 
developing  these  great  commercial  highways,  and  the  committee  desires 
only  to  record  its  belief  that  the  public  interest  demands  and  requires 
such  further  expenditures  upon  these  avenues  of  commerce  as  shall  best 
promote  their  usefulness  and  add  most  effectively  to  the  facilities  they 
afford  in  the  way  of  cheap  transportation. 

THE   PROPOSED   HENNEPIN   CANAL. 

The  only  proposed  national  enterprise  to  which  the  attention  of  the 
committee  has  been  formally  directed  is  the  construction  of  what  is 
known  as  the  Heunepin  Canal,  and  reference  is  here  made  to  the  vory 
able  papers  which  have  been  submitted  in  advocacy  of  this  improve- 
ment, one  by  Edward  Eussell  on  behalf  of  the  Michigan  and  Mississippi 
Canal  Commission  (Appendix,  p.  199),  entitled  "A  plea  for  the  regu- 
lation of  freight  rates  between  the  Upper  Mississippi  States  and  Lake 
Michigan,"  and  the  memorial  prepared  by  Governor  William  Bross,  and 
signed  by  a  large  number  of  the  most  prominent  business  men  of  Chi- 
cago (Appendix,  p.  207). 


174  INTERSTATE    COMMERCE. 

The  facts  cited,  the  detailed  information  contained,  and  the  argu- 
ments so  clearly  presented  in  these  papers  entitle  them  to  the  most 
thoughtful  consideration  by  Congress,  and  show  that  the  commerce  of 
the  nation  would  derive  fresh  and  continued  advantages  from  the  con- 
struction of  this  canal. 

•  Cheap  transportation  between  Chicago  and  the  seaboards  is  assured 
by  the  line  of  free  water  communication  open  through  the  Great  Lakes, 
the  Erie  Canal,  and  the  Hudson,  and  no  method  has  been  suggested  by 
which  the  controlling  influence  of  that  water  competition  could  be  ex- 
tended over  so  wide,  populous,  and  productive  a  territory  at  so  moderate 
an  expense  as  by  constructing  this  short  canal  of  74  miles,  which  would 
give  to  the  people  of  the  Upper  Mississippi  States  direct  water  transit 
connection  with  all  the  States  of  the  Atlantic  seaboard  and  with  Eu- 
rope. The  necessity  of  this  improvement  is  made  more  urgent  by  the 
high  and  oppressive  rates  of  freight  prevailing  between  the  grain-pro- 
ducing States  of  the  Northwest  and  Chicago,  as  compared  with  the 
charges  made  between  that  point  and  the  Atlantic  coast.  By  the  con- 
struction of  this  canal  these  charges  would  be  materially  reduced,  and 
the  grain-producing  States  would  be  given  that  cheap  transit  which  has 
now  become  necessary  to  enable  them  to  successfully  place  their  surplus 
products  in  a  foreign  market. 

THE  EMANCIPATION  OF  THE  WATERS. 

There  are  several  other  similar  and  important  internal  improvements 
which  must  soon  be  undertaken  by  the  General  Government  if  the 
United  States  are  to  keep  step  with  the  leading  nations  of  the  world 
in  the  grand  march  of  progress.  France,  Germany,  and  Russia  are 
making  large  expenditures  to  secure  new  and  cheaper  outlets  for  their 
commerce  by  water  transit,  and  the  great  European  powers  appear  to 
be  engaged  in  an  earnest  and  determined  coutestfor  commercial  suprem- 
acy. In  this  contest  we  must  not  be  left  behind.  We  cannot  afford 
to  assume  the  position  of  a  non-combatant.  We  cannot  afford  to  be 
side-tracked,  but  must  engage  in  the  race  for  cheaper  transportation 
with  all  possible  energy  and  vigor. 

The  cheapest  mode  of  transportation  known  is  by  water.  The  rail- 
roads have  accomplished  wonders,  but  no  railroad  can  successfully  com- 
pete with  a  free  and  unobstructed- water  route,  so  far  as  the  cost  of 
carriage  is  concerned.  Therefore,  to  secure  the  blessings  of  cheap 
transportation,  and  to  hold  our  place  among  the  nations  of  the  earth, 
we  must  develop  our  natural  water-ways  to  their  fullest  capacity,  ana 
give  the  benefits  of  lake,  river,  and  canal  communication  to  the  people 
of  all-  the  States  as  far  as  practicable. 

The  distribution  of  land  and  water  throughout  the  United  States  is 
admirably  adapted  to  the  successful  accomplishment  of  this  purpose. 
The  chief  defects  of  the  present  water -routes  of  the  country,  as  a  whole, 
are  that  they  are  too  long  for  successful  competition  with  the  railroads, 
and  that  they  are  too  isolated  and  disconnected  for  successful  co-opera- 
tion. 

The  obvious  and  only  possible  remedy  for  these  defects  is  to  shorten 
them  and  to  unite  them. 

This  can  be  done  by  means  of  such  improvements  as  the  construction 
of  a  sliijt  canal  across  the  peninsulaof  Florida,  the  enlargement  of  the 
Erie  Canal,  the  building  of  the  Ilcniiepin  Canal,  and  the  continued  im- 
provement of  the  Mississippi  Jtiver.  Ky  thus  shortening  the  existing 
lines  of  water  communication  and  rendering  them  navigable  for  steam 


INTERSTATE    COMMERCE.  175 

vessels  of  large  carry  ing  capacity,  the  cost  of  freight  service  could  be 
reduced  to  the  lowest  possible  minimum,  uot  only  between  a  few  great 
centers  of  trade,  as  now,  but  between  interior  points  in  almost  every 
part  of  the  country  which  are  now  practically  without  competing  lines 
of  transportation. 

A  comprehensive  system  of  internal  improvements  such  as  has  been 
here  briefly  outlined  would  develop  to  their  utmost  extent  the  inex- 
haustible resources  of  the  United  States,  would  give  new  life  and  healthy 
activity  to  trade  throughout  the  length  and  breadth  of  the  land;  would 
put  bread  in  the  months  of  thousands  of  men  now  seeking  employment 
without  success,  would  avert  the  dangers  to  be  apprehended  from  rail 
road  combinations  to  control  the  commerce  of  the  country,  and  would 
secure  rates  of  transportation  that  would  always  enable  the  surplus  prod- 
ucts of  the  nation  to  find  a  profitable  market. 

The  manifest  destiny  of  our  country  points  unerringly  to  this  emanci- 
pation of  ike  waters  as  its  next  great  work,  a  fitting  sequel  to  the  emanci- 
pation of  the  slave,  a  destiny  not  of  war  but  of  beneficence  and  peace, 
to  which  Hie  heart  of  the  nation  turns  as  spontaneously  and  resistlessly 
as  the  waters  of  its  great  river  flow  to  the  Gulf. 


THE   NECESSITY  OF  NATIONAL  REGULATION  OF  INTER 
STATE  COMMERCE. 

The  two  propositions  which  the  committee  has  kept  prominently  in 
view  throughout  the  entire  investigation  have  been  whether  any  legis- 
lation for  the  regulation  of  interstate  transportation  is  necessary  or  ex- 
pedient, and,  if  so,  in  what  manner  can  the  public  interest  be  best  sub- 
served by  legislation  on  that  subject. 

The  consideration  of  the  first  proposition  may  seem  to  be  a  work  of 
supererogation,  for  it  is  the  deliberate  judgment  of  the  committee  that 
upon  no  public  question  are  the  people  so  nearly  unanimous  as  upon  the 
proposition  that  Congress  should  undertake  in  some  way  the  regulation 
of  interstate  commerce.  Omitting  those  who  speak  for  the  railroad  in- 
terests, there  is  practically  no  difference  of  opinion  as  to  the  necessity 
and  importance  of  such  action  by  Congress,  and  this  is  fully  substan- 
tiated by  the  testimony  accompanying  this  report,  which  is  a  fair  con- 
sensus of  public  sentiment  upon  the  question.  The  committee  has 
found  among  the  leading  representatives  of  the  railroad  interests  an 
increasing  readiness  to  accept  the  aid  of  Congress  in  working  out  the 
solution  of  the  railroad  problem  which  has  obstinately  baffled  all  their 
efforts,  and  not  a  few  of  the  ablest  railroad  men  of  the  country  seem 
disposed  to  look  to  the  intervention  of  Congress  as  promising  to  afford 
the  best  means  of  ultimately  securing  a  more  equitable  and  satisfactory 
adjustment  of  the  relations  of  the  transportation  interests  to  the  com- 
munity than  they  themselves  have  been  able  to  bring  about. 

The  evidence  upon  this  point  is  so  conclusive  that  the  committee  has 
no  hesitation  in  declaring  that  prompt  action  by  Congress  upon  this 
important  subject  is  almost  unanimously  demanded  by  public  senti- 
ment. 

This  demand  is  occasioned  by  the  existence  of  acknowledged  evils 
incident  to  and  growing  out  of  the  complicated  business  of  transporta- 
tion as  now  conducted,  evils  which  the  people  believe  can  be  checked 
and  mitigated,  if  not  wholly  remedied,  by  appropriate  legislation.  The 


176  INTERSTATE    COMMERCE. 

committee  recognizes  the  justice  of  this  demand,  and  believes  that  ac- 
tion by  Congress  looking  to  the  regulation  of  interstate  transportation 
is  necessary  and  expedient,  for  the  following  reasons : 

1.  The  public  interest  demands  regulation  of  the  business  of  trans- 
portation because,  in  the  absence  of  such  regulation,  the  carrier  is  prac- 
tically and  actually  the  sole  and  final  arbiter  upon  all  disputed  ques- 
tions that  arise  between  shipper  and  carrier  as  to  whether  rates  are 
reasonable  or  unjust  discrimination  has  been  practiced. 

It  is  argued  by  railroad  representatives  that  arbitrary  or  oppressive 
rates  cannot  be  maintained;  that  they  are  adjusted  and  sufficiently 
regulated  by  competition  with  rival  -roads  and  with  water  routes,  by 
commercial  necessities,  by  the  natural  laws  of  trade,  and  by  that  self- 
interest  which  compels  the  corporations  to  have  due  regard  to  the  wants 
and  the  opinions  of  those  upon  whom  they  must  depend  for  business ; 
that  such  discriminations  as  exist  are  for  the  most  part  unavoidable  ; 
that  the  owners  and  managers  of  the  property  are  the  best  judges  of 
the  conditions  and  circumstances  that  affect  the  cost  of  transportation 
and  should  determine  the  compensation  they  are  entitled  to  receive ; 
and  that,  in  any  event,  the  common  law  affords  the  shipper  an  adequate 
remedy  and  protection  against  abuse  or  any  infringement  of  his  rights. 

This  answer  fails  to  recognize  the  public  nature  and  obligations  of 
the  carrier,  and  the  right  of  the  people,  through  the  Governmental  au- 
thority, to  have  a  voice  in  the  management  of  a  corporation  which  per- 
forms a  public  function.  Nor  do  the  facts  warrant  the  claim  that  com- 
petition and  self-interest  can  be  relied  upon  to  secure  the  shipper  against 
abuse  and  unjust  discrimination,  or  that  he  has  an  available  and  satis- 
factory remedy  at  common  law. 

If  it  is  found  that  the  common  law  and  the  courts  do  not,  in  fact,  af- 
ford to  the  shipper  an  effective  remedy  for  his  grievances,  we  have  uo 
need  to  inquire  to  what  extent  grievances  may  exist.  The  complicated 
nature  of  the  countless  transactions  incident  to  the  business  of  trans- 
portation make  it  inevitable  that  disagreements  should  arise  between 
the  parties  in  interest,  and  it  is  neither  just  nor  proper  that  disputed 
questions  materially  affecting  the  business  operations  of  a  shipper  should 
be  left  to  the  final  determination  of  those  representing  an  opposing 
financial  interest.  When  such  disagreements  occur  the  shipper  and  the 
carrier  are  alike  entitled  to  a  fair  and  impartial  determination  of  the 
matters  at  issue,  and  by  all  the  principles  governing  judicial  proceed- 
ings the  most  fair-minded  railroad  official  is  disqualified  by  his  personal 
interest  in  the  result  from  giving  such  a  determination.  If,  however, 
there  existed  an  impartial  tribunal  to  which  the  shipper  could  readily  ap- 
peal, he  would  find  less  occasion  for  appealing  from  the  decision  of  the 
carrier,  and  differences  between  shipper  and  carrier  would  be  more 
likely  to  be  adjusted  amicably  without  such  an  appeal. 

The  simple  fact  that  the  shipper  is  now  obliged  to  submit  to  the  ad- 
judication of  his  complaint  by  the  other  party  in  interest,  the  party  by 
whom  he  supposes  himself  to  have  been  aggrieved,  is  in  itself  sufficient 
to  demonstrate  the  necessity  of  such  legislation  as  will  secure  to  the 
shipper  that  impartial  hearing  of  his  complaints  to  which  he  is  entitled 
by  all  the  recognized  principles  of  justice  and  equity. 

Evidence  is  not  wanting  to  prove  that  the  remedy  at  common  law  is 
impracticable  and  of  little  advantage  to  the  ordinary  shipper.  It  has 
been  found  so  by  the  people  of  the  States  in  dealing  with  their  local 


INTERSTATE    COMMERCE.  177 

traffic,  and,  as  has  been  shown,  their  recognition  of  the  fact  has  been 
authoritatively  recorded  in  nearly  every  State  in  the  Union  by  statu- 
tory enactments,  and  in  many  of  them  by  the  establishment  of  commis- 
sions, in  the  effort  to  provide  for  the  shipper  that  prompt  and  effective 
remedy  which  it  has  been  found  by  experience  that  recourse  to  the  com- 
mon law  has  failed  to  afford.  The  reasons  for  this  failure  apply  with 
even  greater  force  to  the  more  complicated  transactions  of  interstate 
commerce  than  to  State  traffic,  because  the  former  involve  more  per- 
plexing questions  and  are  affected  by  a  greater  diversity  of  varying  con- 
ditions. The  legislation  of  the  States,  the  reports  of  the  State  commis- 
sions, the  records  of  the  courts,  the  evidence  of  shippers,  and,  in  short, 
the  whole  current  of  testimony,  is  to  the  same  effect;  and  the  fact  stated 
is  also  admitted  by  some  of  the  highest  railroad  authorities.  Mr.  Fink 
says: 

In  many  cases  where  small  amounts  are  involved,  which  do  not  justify  legal  pro- 
ceedings against  the  company,  the  aggrieved  parties  are  prevented  from  prosecuting 
their  claims.  *  «  »  Ordinary  courts  are  not  properly  constituted  for  that  purpose, 
and  the  time  required  for  the  adjudication  of  claims  is  so  long  and  the  expenses  so 
great  as  to  defeat  the  very  object  for  which  proceedings  are  instituted.  (Testimony, 
p.  107). 

Leaving  out  of  consideration  the  natural  disinclination  of  the  average 
shipper  to  engage  in  litigation  with  a  corporation  which  may  have  the 
power  to  determine  his  success  or  failure  in  business,  and  to  enter  the 
lists  against  an  adversary  with  ample  resources  and  the  best  legal  talent 
at  its  command  and  able  to  wear  out  an  opponent  by  the  tedious  delays 
of  the  law,  it  is  plain  that  the  shipper  is  still  at  a  great  disadvantage 
in  seeking  redress  for  grievances  under  the  common  law,  which  places 
upon  the  complainant  the  burden  of  proof  and  requires  him  to  affirma- 
tively establish  the  unreasonableness  of  a  given  rate  or  the  fact  of  an 
alleged  discrimination.  What  such  an  undertaking  practically  involves 
is  indicated  by  the  following  extract  from  the  statement  of  Mr.  Kern  an, 
the  chairman  of  the  New  York  commission,  which  sums  up  the  whole 
case: 

Assuredly  there  have  been  and  do  exist  unreasonable  rates  and  unjust  discrimina- 
tions. This  much  will  be  admitted  by  all ;  it  will  not  be  denied  even  by  any  carrier. 
Why,  then,  have  not  the  courts  enjoined  the  continuance  of  the  wrongs  and  enforced 
the  payment  of  damages  f  Why,  again,  is  it  that  substantially  no  such  suits  ever  have 
been  brought  and  that  so  few  decisions  in  this  country  exist  f  It  is  not  because  of  de- 
fects in  the  law  or  in  the  constitution  of  the  courts,  but  it  is  because  the  subject  is  on* 
which  neither  client  nor  lawyer,  judge  nor  jury,  can  unravel  or  deal  with  intelligently 
within  the  compass  of  an  ordinary  trial  and  with  such  knowledge  of  the  matter  as 
men  generally  well  educated  possess.  Let  a  man  take  the  testimony  in  five  volumes 
before  the  Hepburn  committee ;.  read  one  hundred  pages  of  the  clear  and  able  state- 
ments of  Mr.  Blancliard,  for  instance ;  con  over  the  facts  and  figures  he  gives,  and 
then  let  him  try  to  reach  a  conclusion  upon  the  question  under  discussion.  Some  con- 
ception will  thus  be  obtained  of  what  a  lawsuit  is  which  involves  the  reasonableness 
of  rates,  or  the  existence  of  an  unjust  discrimination,  or  a  local  rate  as  compared  with 
a  through  rate.  As  the  onus  is  upon  the  complainant,  add  to  his  difficulties  the  fact 
that  his  adversary  has  nearly  all  the  evidence  in  his  possession,  locked  up  in  books 
and  in  the  memory  and  intelligence  of  experts  who  have  made  the  subject  their 
study.  The  expense  involved,  the  uncertainty  to  be  faced,  and  the  difficulties  to  be 
overcome  in  an  ordinary  suit  at  law  have  made  that  remedy  obsolete  and  useless. 
(Appendix;  p.  19.) 

S.  Itep.  40 12 


178  INTERSTATE    COMMERCE. 

All  these  considerations,  fully  corroborated  as  they  are  by  the  evi- 
dence submitted,  have  satisfied  the  committee  that  the  common  law 
wholly  fails  to  afford  an  effective  remedy  against  unreasonable  or  dis- 
criminating rates,  and  that,  without  additional  legislation,  the  carrier 
is  practically  the  sole  and  only  judge  of  the  rights  of  the  producer  and 
shipper  in  respect  to  transportation. 

2.  It  is  the  duty  of  Congress  to  undertake  the  regulation  of  the  busi- 
ness of  transportation,  because  of  admitted  abuses  in  ita  management 
and  of  acknowledged  discriminations  between  persons  and  places  in  its 
practical  operation — evils  which  it  is  possible  to  reach  and  remedy  only 
through  the  exercise  of  the  powers  granted  by  the  Constitution  to  Con- 
gress, and  against  which  the  citizen  is  entitled  to  the  protection  and 
relief  the  national  authority  can  alone  afford. 

/  Attention  will  be  called  hereafter  to  these  causes  of  complaint;  and 
'  it  is  perhaps  only  necessary  to  suggest  here  that  the  railroad  argument 
against  legislation  on  the  ground  that  competition,  the  laws  of  trade, 
and  an  "enlightened  self- interest"  afford  all  needful  protection  and  the 
most  effective  regulation,  is  predicated  upon  the  conditions  which  pre- 
vail at  the  great  commercial  centers  and  in  favored  localities  where 
competition  is  most  active,  and  applies  more  particularly  to  the  larger 
shippers,  who  are  always  able  to  take  care  of  themselves  and  at  such 
points  can  usually  depend  for  protection  and  fair  treatment  upon  the 
eagerness  of  the  corporations  to  Capture  all  the  business  possible.  But 
it  should  be  the  aim  of  the  law  to  protect  the  weak,  and  it  is  at  the 
great  number  of  non-competitive  interior  points,  scattered  all  over  the 
land,  at  which  even  the  protection  elsewhere  afforded  by  competitive  in- 
fluences is  not  found,  and  where  the  producer  and  shipper  are  most  com- 
pletely in  the  power  of  the  railroads,  that  additional  safeguards  are 
most  needed. 

3.  National  legislation  is  necessary  to  remedy  the  evils  complained 
of,  because  the  operations  of  the  transportation  system  are,  for  the  most 
part,  beyond  the  jurisdiction  of  the  States,  and,  until  Congress  acts, 
not  subject  to  any  governmental  control  in  the  public  interest. 

The  States  have  no  power  to  regulate  interstate  commerce,  and  it  ap- 
pears from  the  evidence  that  even  their  control  of  their  own  domestic 
traffic  is  restricted  and  frequently  made  inoperative  by  reason  of  its  in- 
timate intermingling  with  interstate  commerce  and  by  the  present  free- 
dom of  the  latter  from  any  legislative  restrictions.  Some  of -the  diffi- 
culties of  effective  State  regulation  in  the.  absence  of  national  legislation 
have  been  pointed  out  elsewhere  in  this  report,  and  illustrations  have 
been  given  of  the  greater  volume  and  importance  of  interstate  as  com- 
pared with  State  traffic.  National  supervision  would  supplement,  give 
direction  to,  and  render  effective  State  supervision,  and  is  especially 
necessary  as  the  only  method  of  securing  that  uniformity  of  regulation 
and  operation  which  the  transportation  system  requires  for  its  highest 
development. 

The  clearly-established  fact  that,  by  reason  of  the  constitutional  divis- 
ion of  powers  between  the  States  and  the  General  Government,  the 
States  have  been  able  only  to  partially  control  the  business  of  trans- 
portation within  their  own  borders  has  been  the  principal  inciting  cause. 
of  the  popular  demand  for  national  regulation,  and  is  suffieiont,  in  the 
judgment  of  the  committee,  to  call  for  such  action  by  Congress  as  will 
make  effective  the  means  of  regulation  found  necessary  and  adopted  by 
the  States. 


INTERSTATE    COMMERCE.  179 

4.  National  legislation  is  also  necessary,  because  the  business  of  trans- 
portation is  essentially  of  a  nature  which  requires  that  uniform  system 
and  method  of  regulation  which  the  national  authority  can  alone  pre- 
scribe. 

The  key-note  to  all  the  decisions  of  the  United  States  Supreme  Court 
concerning  the  power  to  regulate  commerce  is  found  in  the  declaration 
made  in  Cooley  v.  Board  of  Wardens,  and  frequently  referred  to  in 
other  cases,  that  "  whatever  subjects  of  this  power  are  in  their  nature 
national,  or  admit  only  of  one  uniform  system  or  plan  of  regulation, 
may  justly  be  said  to  be  of  such  a  nature  as  to  require  exclusive  legis- 
lation by  Congress ; "  and,  as  is  said  by  the  court  in  the  late  case  of 
Gloucester  Ferry  Company  v.  Pennsylvania,  "  it  needs  no  argument  to 
show  that  the  commerce  with  foreign  nations  and  between  the  States, 
which  consists  in  the  transportation  of  persons  and  property  between 
them,  is  a  subject  of  national  character,  and  requires  uniformity  of  reg- 
ulation. Congress  alone,  therefore,  can  deal  with  such  transportation." 

5.  The  failure  of  Congress  to  act  is  an  excuse  for  the  attempts  made 
by  the  railroads  to  regulate  the  commerce  of  the  country  in  their  own 
(vay  and  in  their  own  interests  by  whatever  combinations  and  methods 
they  are  able  to  put  into  operation. 

Through  the  absence  of  national  legislation  the  railroads  of  the 
vluited  States  have  been  left  to  work  out  their  own  salvation.  The 
practical  results  of  their  efforts  have  been  by  no  means  encouraging,  as 
the  present  depressed  condition  of  the  railway  interests  bears  witness, 
nor  do  they  claim  to  have  made  any  substantial  progress  during  the 
past  fifteen  or  twenty  years.  It  is  true  that  in  this  period  the  railroads 
have  accomplished  wonders  in  reducing  the  cost  of  transportation,  in 
removing  the  limitations  of  distance  from  trade  between  remote  local- 
ities, and  in  building  up  and  widely  extending  the  general  commerce  of 
the  country.  But,  notwithstanding  all  these  marvelous  achievements, 
for  which  due  credit  should  be  given,  the  solid  fact  still  claims  consid- 
eration, that  the  inequalities  and  discriminations  which  characterize 
the  operations  of  the  system  in  its  entirety  are  now  as  pronounced  as 
;.n  the  earlier  stages  of  its  development. 

In  the  recognized  existence  of  these  evils  and  in  the  failure  of  the 
national  authority  to  offer  any  remedy,  railroad  managers  have  found 
their  justification  for  seeking  a  remedy  through  methods  which  have 
not  commended  themselves  to  the  public  judgment  and  which  have 
threatened  even  greater  dangers  to  the  body-politic.  In  the  absence 
Q  -of  national  legislation,  the  railroads  have  naturally  resorted  to  the  only 
methods  by  which  they  could  unaided  secure  any  degree  of  stability 
and  uniformity  in  their  charges — consolidation  and  confederation.  The 
final  outcome  of  continued  consolidations  would  be  the  creation  of  an 
organization  more  powerful  than  the  Government  itself  and  perhaps 
beyond  its  control.  The  same  result  might  follow  the  successful  de- 
velopment of  the  policy  of  confederation  or  pooling,  if  unrestricted  by 
Governmental  supervision,  and  either  would  be  inimical  to  the  public 
interest.  But  while  this  would  be  the  logical  outcome  of  the  existing 
tendency  of  railway  organization  and  management,  there  are  satisfactory 
reasons  for  believing  that  it  will  not  be  the  actual  result,  and  that  this 
policy  has  substantially  reached  the  limit  to  which  it  can  be  carried.  In 
a  sense  it  may  be  true  that  the  railroad  properties  of  the  country  are 
to-day  largely  within  the  control  of  a  comparatively  small  circle,  yet  the 


180  INTERSTATE    COMMERCE. 

colossal  combinations  which  have  been  effected  find  other  gigantic  com- 
binations equally  as  powerful  successfully  contending  for  the  traffic  of 
the  territory  they  seek  to  control.  The  vast  geographical  extent  of  the 
country,  its  immense  resources,  the  diverse  interests  of  different  sec- 
tions, the  abundance  of  capital,  the  commanding  influence  and  the  en- 
terprise of  the  great  commercial  centers,  the  impossibility  of  controlling 
35,000  miles  of  free  water-routes — all  these  considerations  lessen  the 
dangers  to  be  apprehended  from  future  consolidations  and  combina- 
tions, and  at  the  same  time  show  how  difficult  it  will  be  for  the  railroads 
to  work  out  the  problem  alone  and  unaided. 

Experience  and  investigation  have  up  to  this  time  failed  to  indicate 
how  the  inequalities  and  discriminations  complained  of,  which  have 
grown  into  and  become  a  fundamental  part  of  the  system  upon  which 
the  business  of  the  entire  country  is  conducted,  are  to  be  done  away 
with  without  a  serious  disturbance  of  every  individual  and  public  busi- 
ness interest.  To  equalize  through  and  local  rates,  and  to  give  them 
that  degree  of  uniformity  and  stability  so  greatly  needed,  must  neces- 
sarily involve  a  complete  readjustment  and  reconstruction  of  the  com- 
mercial relations  and  business  methods  of  the  whole  country.  How 
this  is  to  be  accomplished  is  the  secret  which  underlies  the  satisfactory 
solution  of  the  railroad  problem. 

That  a  problem  of  such  magnitude,  importance,  and  intricacy  can  be 
summarily  solved  by  any  master-stroke  of  legislative  wisdom  is  beyond 
the  bounds  of  reasonable  belief.  That  the  railroads,  unaided  or  unre- 
strained, can  or  will  eventually  work  out  its  solution  seems  highly  im- 
probable, judging  from  past  experience,  and  cannot  reasonably  be  ex- 
pected. That  a  satisfactory  solution  of  the  problem  can  ever  be  secured 
without  the  aid  of  wise  legislation  the  committee  does  not  believe. 

THE    CAUSES   OF   COMPLAINT   AGAINST   THE  EAILKOAD 

SYSTEM. 

The  complaints  against  the  railroad  system  of  the  United  States 
expressed  to  the  committee  are  based  upon  the  following  charges : 

1.  That  local  rates  are  unreasonably  high,  compared  with  through 
rates. 

2.  That  both  local  and  through  rates  are  unreasonably  high  at  non- 
competing  points,  either  from  the  absence  of  competition  or  in  conse- 
quence of  pooling  agreements  that  restrict  its  operation. 

3.  That  rates  are  established  without  apparent  regard  to  the  actual 
cost  of  the  service  performed,  and  are  based  largely  on  "  what  the  traf- 
fic will  bear." 

4.  That  unjustifiable  discriminations  are  constantly  made  between  in- 
dividuals in  the  rates  charged  for  like  service  under  similar  circum- 
stances. 

5.  That  improper  discriminations  are  made  between  articles  of  freight 
and  branches  of  business  of  a  like  character,  and  between  different 
quantities  of  the  same  class  of  freight. 

6.  That  unreasonable  discriminations  are   made  between  localities 
similarly  situated, 


INTERSTATE    COMMERCE.  181 

7.  That  the  effect  of  the  prevailing;  policy  of  railroad  management  is, 
by  an  elaborate  system  of  secret  special  rates,  rebates,  drawbacks,  and 
concessions,  to  foster  monopoly,  to  enrich  favored  shippers,  and  to  pre- 
vent free  competition  in  many  lines  of  trade  in  which  the  item  of  trans- 
portation is  an  important  factor. 

S.  That  such  favoritism  and  secrecy  introduce  an  element  of  uncer- 
tainty into  legitimate  business  that  greatly  retards  the  development  of 
our  industries  and  commerce. 

9.  That  the  secret  cutting  of  rates  and  the  sudden  fluctuations  that 
constantly  take  place  are  demoralizing  to  all  business  except  that  of 
a  purely  speculative  character,  and  frequently  occasion  great  injustice 
and  heavy  losses. 

10.  That,  in  the  absence  of  national  and  uniform  legislation,  the  rail- 
roads are  able  by  various  devices  to  avoid  their  responsibility  as  car- 
riers, especially  on  shipments  over  more  than  one  road,  or  from  one 
State  to  another,  and  that  shippers  find  great  difficulty  in  recovering 
damages  for  the  loss  of  property  or  for  injury  thereto. 

11.  That  railroads  refuse  to  be  bound  by  their  own  contracts,  and 
arbitrarily  collect  large  sums  in  the  shape  of  overcharges  in  addition  to 
the  rates  agreed  upon  at  the  time  of  shipment. 

12.  That  railroads  often  refuse  to  recognize  or  be  responsible  for  the 
acts  of  dishonest  agents  acting  under  their  authority. 

13.  That  the  common  law  fails  to  afford  a  remedy  for  such  grievances, 
and  that  in  cases  of  dispute  the  shipper  is  compelled  to  submit  to  the 
decision  of  the  railroad  manager  or  pool  commissioner,  or  run  the  risk 
of  incurring  further  losses  by  greater  discriminations. 

14.  That  the  differences  in  the  classifications  in  use  in  various  parts 
of  the  country,  and  sometimes  for  shipments  over  the  same  roads  in 
different  directions,  are  a  fruitful  source  of  misunderstandings,  and  are 
often  made  a  means  of  extortion. 

15.  That  a  privileged  class  is  created  by  the  granting  of  passes,  and 
that  the  cost  of  the  passenger  service  is  largely  increased  by  the  extent 
of  this  abuse. 

16.  That  the  capitalization  and  bonded  indebtedness  of  the  roads 
largely  exceed  the  actual  cost  of  their  construction  or  their  present 
value,  and  that  unreasonable  rates  are  charged  in  the  effort  to  pay  divi- 
dends on  watered  stock  and  interest  on  bonds  improperly  issued. 

17.  That  railroad  corporations  have  improperly  engaged  in  lines  of 
business  entirely  distinct  from  that  of  transportation,  and  that  undue 
advantages  have  been  afforded  to  business  enterprises  in  which  railroad 
officials  were  interested. 

18.  That  the  management  of  the  railroad  tmsiness  is  extravagant  and  / 
wasteful,  and  that  a  needless  tax  is  imposed  upon  the  shipping  and 
traveling  public  by  the  unnecessary  expenditure  of  large  sums  in  the 
maintenance  of  a  costly  force  of  agents  engaged  in  a  reckless  strife  for 
competitive  business. 


182  INTERSTATE    COMMERCE. 

THE  ESSENCE  OP  THE   COMPLAINTS. 

It  will  be  observed  that  the  most  important,  and  in  fact  nearly  all, 
of  the  foregoing  complaints  are  based  upon  the  practice  of  discrimina- 
tion in  one  form  or  another.  This  is  the  principal  cause  of  complaint 
against  the  management  and  operation  of  the  transportation  system  of 
the  United  States,  and  gives  rise  to  the  questions  of  greatest  difficulty 
in  the  regulation  of  interstate  commerce. 

It  is  substantially  agreed  by  all  parties  in  interest  that  the  great 
desideratum  is  to  secure  equality,  so  far  as  practicable,  in  the  facilities 
for  transportation  afforded  and  the  rates  charged  by  the  instrumentali- 
ties of  commerce.  The  burden  of  complaint  is  against  unfair  differences 
in  these  particulars  as  between  different  places,  persons,  and  commodi- 
ties, and  its  essence  is  that  these  differences  are  unjust  in  comparison 
with  the  rates  allowed  or  facilities  afforded  to  other  persons  and  places 
for  a  like  service  under  similar  circumstances. 

The  first  question  to  be  determined,  apparently,  is  whether  the  ine- 
qualities complained  of  and  admitted  to  exist  are  inevitable,  or  whether 
they  are  entirely  the  result  of  arbitrary  and  unnecessary  discrimination 
on  the  part  of  the  common  carriers  of  the  country;  and  the  considera- 
tion of  this  question  suggests  an  inquiry  as  to  the  proper  basis  upon 
which  rates  of  transportation  should  be  established. 

RAILROAD  EATES— THE  PRINCIPLES  UPON  WHICH  THEY 
SHOULD  BE  ESTABLISHED,  AND  THE  LIMITATIONS 
WITHIN  WHICH  DISCRIMINATION  MAY  BE  JUSTIFIABLE. 

Neither  experience  nor  investigation  have  satisfactorily  settled  the 
many  perplexing  questions  that  are  encountered  in  attempting  to  deter- 
mine the  principles  upon  which  a  schedule  of  charges  should  be  ar- 
ranged, either  for  a  single  railroad  or  for  the  entire  system.  Differences 
in  rates  between  railroads  differing  greatly  in  their  earning  capacity 
can  readily  be  accounted  for  and  understood,  and  yet  the  reasons  which 
justify  these  variations  are  equally  potential  in  enforcing  differences  in 
rates  between  different  commodities  upon  a  single  railroad,  and  render 
it  impossible  to  base  rates  entirely  upon  the  cost  or  value  of  the  service 
rendered  in  all  instances. 

Jjiequality  must  exist  unless  uniformity  is  possible.  Complete  uni- 
formity would  require  the  transportation  of  all  classes  of  freight  over 
.any  number  of  roads  at  the  same  rate  per  car  load,  or  per  hundred 
pounds,  somewhat  on  the  same  principle  that  correspondence  is  handled 
by  the  Post-Office  Department.  Any  approach  to  such  a  degree  of  uni- 
formity in  the  operation  of  the  hundreds  of  independent  railroad  cor- 
porations, each  with  conflicting  interests,  and  in  their  charges  for  the 
transportation  of  the  innumerable  variety  of  commodities  which  are 
shipped  over  the  125,000  miles  of  railway  in  the  United  States,  is  obvi- 
ously entirely  out  of  the  question  under  existing  circumstances.,— It- 
could  only  be  made  possible  by  the  General  Government  obtaining  pos- 
session of  all  the  transportation  lines  of  the  country  and  operating  them 
as  a  unit  in  the  same  manner  that  the  postal  service  is  conducted.  Nor 
would  it  then  be  found  Advisable  or  entirely  practicable,  if  we  may 
judge  from  the  experience  of  those  European  nations  in  which  attempts 
have  been  made  to  apply  these  principles  under  the  system  of  state 
ownership  and  management,  and  hence  under  the  most  favorable  con- 
ditions. 


INTERSTATE    COMMERCE.  183 

It  is  sometimes  argued  that  any  discrimination   on  the  part  of  the 
common  carrier  is  necessarily  unjust;  that  there  can  be  no  such  thing 
as  just  discrimination.     This  is  not  the  theory  or  principle  of  the  com- 
mon law,  which  is  that  all  who  are  situated  alike  must  be  treated  alike. 
But  all  cannot  be  situated  alike,  and  the  rule,  therefore,  only  holds  good 
when  limited  to  transactions  of  the  same  character,  conducted  under 
similar  circumstances  and  conditions.     In  the  practical  management\ 
of  a  railroad,  whether  by  the  strongest  government  or  by  a  corpora-  r 
tion,  it  is  found  impossible  to  avoid  the  exercise  of  discrimination,  and,( 
in  consequence,  the  courts  have  always  recognized  the  distinction 


tween  justifiable  and  unjust  discrimination.  Whether  the  discrimination  .1 
practiced  in"  any  given  instance  was  allowa 


practiced  in"  any  given  instance  was  allowable  or  unwarranted  is 
tion  that  can  be  fairly  determined  only  by  understanding  the  trade  con- 
ditions and  special  circumstances  that  influence  and  govern  the  action 
of  the  railroad  managers  in  that  particular  transaction.  These»are  of 
almost  infinite  variety  and  frequently  beyond  the  observation  of  those 
without  practical  experience  in  railroad  management.  It  is  sometimes 
found  that  discriminations  complained  of  may  be  justified  by  reasons 
which  suggest  themselves  only  to  those  having  expert  knowledge  and 
long  training  in  the  business  of  transportation.  This  the  shipper  can- 
not have,  and  he  is  therefore  not  always  able  to  judge  whether  the 
reasons  advanced  in  justification  of  discriminations  against  him  are  suf- 
ficient or  merely  misleading.  Hence  it  becomes  necessary  to  provide 
some  method  by  which  the  shipper  may  ascertain  whether  discrimina- 
tions that  seem  to  him  inequitable  can  be  justified,  in  order  to  protect 
him  against  the  arbitrary  exercise  by  the  carrier  of  the  power  of  deter- 
mining those  questions,  often  of  the  greatest  public  importance. 

Discriminations  are  common  in  commercial  transactions  of  every  de- 
scription. They  are  as  inevitable  as  are  the  differences  in  the  charac- 
ter and  appearance  of  individuals.  The  merchant  is  not  under  obliga- 
tion to  treat  all  his  customers  alike,  and  may  discriminate  between 
them  in  the  prices  charged  for  similar  articles,  having  regard  only  to 
his  own  interest,  as  he  views  it.  He  is  free  to  make  prices  "to  develop 
business."  He  may  offer  "  bargains"  to  bring  trade.  He  may  sell  some 
articles  "at  cost,"  and  charge  100  per  cent,  profit  on  others,  if  he  can 
get  it.  In  short,  he  is  at  liberty  to  charge  whatever  prices  he  thinks 
his  customers  will  stand. 

Under  the  policy  of  private  ownership,  and  in  the  absence  of  legisla- 
tive regulation,  the  railroad  business  of  the  country  has  from  the  be- 
ginning been  built  up  and  conducted  upon  much  the  same  principles. 
A  railroad  corporation  has  been  looked  upon  by  its  managers  as  an  as- 
sociation of  individuals  engaged  in  the  furnishing  and  selling  of  trans- 
portation for  their  own  advantage  and  free  to  conduct  the  business  in 
their  own  way,  as  individual  mercantile  enterprises  are  conducted. 
They  have  been  slow  to  recognize  the  public  nature  and  public  obliga- 
tions of  the  corporations  under  their  control,  and  to  realize  the  fact 
that  these  obligations  impose  restrictions  upon  their  management  that 
do  not  affect  the  freedom  of  action  rightfully  conceded  to  the  individual 
trader.  The  natural  result  of  their  disregard  of  these  obligations  and 
of  their  independent  action  has  been  that  the  railroad  business  is  in- 
extricably involved  in  a  complicated  network  of  discriminations,  sanc- 
tioned by  custom  and  so  well  established  that  it  is  now  extremely 
difficult,  in  many  instances,  to  draw  the  line  between  discriminations 
that  are  justifiable  and  those  that  are  unwarranted. 


184  INTERSTATE    COMMERCE. 

CHARGING  "WHAT   THE   TRAFFIC  WILL  BEAR." 

A  frequent  source  of  complaint  is  the  fact  that  the  charges  upon 
shipments  of  articles  similar  in  character,  bulk,  or  value  for  similar 
distances  vary  more  widely  than  the  apparent  difference  in  the  cost  of 
performing  the  service  in  each  case. 

There  would  be  no  excuse  for  any  difference  in  charges  under  such 
circumstances,  unless  there  was  an  actual  difference  i;i  the  cost  of  the 
service  performed,  if  the  railroads  could  establish  such  rates  as  they 
saw  fit,  but  the  equality  and  uniformity  which  would  be  practicable  un- 
der such  conditions  cannot  be  secured.  It  is  plain  that  they  must  ac- 
cept a  rate  at  which  any  given  commodity  can  be  moved  from  the  place 
of  production  to  the  place  of  consumption  and  leave  a  margin  of  profit 
to  the  shipper,  otherwise  that  article  of  freight  will  not  be  transported, 
or  it  will  seek  other  means  of  carriage.  The  movement  of  that  particular 
commodity  by  rail  is  determined  by  considerations  wholly  independent 
of  and  not  affected  by  the  cost  of  the  service  to  be  performed.  It  is  de- 
termined absolutely  and  solely  by  those  economic  conditions  which  gov- 
ern the  exchange  of  commodities,  by  those  trade  changes  within  natu- 
ral limits  which  are  constantly  going  on  in  all  nations,  and  by  the  laws 
of  supply  and  demand  which  establish  values.  These  conditions  and 
laws  place  the  first  limitation  upon  the  free  will  of  the  carrier  in  the 
construction  of  a  tariff  of  charges,  and  exercise  a  potential  influence  in 
their  determination  which  has,  whenever  the  attempt  has  been  made, 
rendered  it  impossible  to  base  rates  of  transportation  entirely  upon  the 
cost  of  the  service  in  every  case. 

The  maximum  rate  it  is  possible  to  obtain  within  these  limitations 
varies  with  different  commodities,  and  differences  between  them  become 
inevitable  on  whatever  principle  the  rates  may  be  arranged.  They'  are 
inevitable,  because  on  some  articles  the  maximum  rates  that  can  be 
secured  are  but  little  above  the  actual  cost  of  their  movement,  and  be- 
cause the  same  percentage  of  profit  on  the  whole  business  would  not 
produce  sufficient  revenue  for  the  successful  operation  of  the  road. 
This  is  the  case  with  cheap  and  bulky  commodities  ;  and  the  most  rigid 
tariffs  established  by  State  or  foreign  governments,  even  when  avow- 
edly based  upon  the  cost  of  the  service,  have  violated  that  principle, 
and  made  an  exception  in  the  case  of  necessaries  like  coal. 

The  only  alternative,  evidently,  is  to  vary  the  relative  rates  upon  dif- 
ferent articles  in  such  a  manner  as  to  admit  of  the  movement  of  each 
class  of  freight,  and  at  the  same  time  secure  the  necessary  revenue. 
This  is  discrimination,  but  it  is  made  necessary  by  circumstances  wholly 
beyond  the  control  of  the  carrier  or  the  law-making  power,  and  is  justi- 
fiable so  long  as  a  reasonable  relation  is  preserved  between  the  rates 
established  upon  similar  commodities,  and  when  exercised  within  cer- 
tain limits  which  are  too  often  ignored. 

A  given  amount  of  revenue  being  required,  the  problem  daily  pre- 
sented to  the  railroad  manager  is  to  determine  the  contribution  towards 
that  sum  total  which  should  equitably  be  made  by  each  shipment.  It 
is  evident  that  each  should  first  contribute  at  least  the  actual  cost  of 
its  movement,  for  otherwise  a  loss  would  be  incurred  which  would  un- 
justly increase  the  assessment  upon  less  favored  shipments.  The  car- 
rying of  freight  at  a  rate  below  the  actual  movement  expenses  is  plainly 
an  illegitimate  transaction,  which  must  necessarily  involve  either  im- 
position upon  and  extortion  from  shippers  not  thus  favored  or  loss  upon 
the  stockholders,  and  it  is  wholly  indefensible  if  done  at  the  expense  of 
the  shippers  discriminated  against. 


INTERSTATE   COMMERCE.  185 

This,  then,  fixes  the  minimum  amount  that  should  be  collected  upon 
each  shipment.  The  maximum  is  determined  by  the  considerations 
heretofore  indicated.  It  is  only  within  the  limits  thus  plainly  defined 
that  discrimination  in  the  adjustment  of  rates  may  be  equitably  prac- 
ticed by  the  carrier,  and  the  variations  must  always  be  confined  to  that 
portion  of  the  charge  which  is  in  excess  of  the  actual  cost  of  movement 
to  be  equitable  and  justifiable. 

When  each  shipment  has  contributed  its  proportion  of  the  operating 
expenses,  there  yet  remains  to  be  provided  for  the  larger  portion  of  the 
revenue  required.  This  includes  the  amounts  necessary  for  the  pay- 
ment of  interest,  for  repairs  and  the  maintenance  of  the  property,  for 
the  general  expenses  of  management,  and  for  a  fair  profit  to  the  stock- 
holders. It  is  estimated  by  Mr.  Fink  "that  upon  an  average  of  $1 
earned  by  all  the  roads  in  the  United  States  for  a  certain  service,  40 
cents  are  required  to  pay  4£  per  cent,  interest  on  the  bonds  and  stock, 
35  cents  to  pay  the  mere  movement  expenses  above  referred  to,  and, 
say,  25  cents  to  pay  for  the  maintenance  of  the  roadway  and  the  gen- 
eral expenses  of  the  organization,."  According  to  this  calculation,  even 
when  each  shipment  has  paid  the  cost  of  its  movement,  but  35  per  cent, 
of  the  revenue  necessary  has  been  secured,  and  the  burden  of  paying 
the  remaining  65  per  cent,  legitimately  needed  for  the  support  of  the 
road  should  be  shared  by  the  whole  traffic,  and  distributed  between  the 
different  shipments  as  equitably  as  circumstances  may  permit. 

It  follows,  therefore,  that  a  just  and  equitable  rate  on  any  particular 
shipment  is  one  which  covers  the  actual  expense  to  the  carrier  of  that 
particular  transaction,  plus  a  proportionately  fair  contribution  towards 
the  sum  total  of  the  fixed  charges  ;  and  that  any  discrimination  which  i 
goes  beyond  these  limits  is  unjust  and  indefensible. 

The  capacity  of  each  commodity  to  contribute  to  the  payment  of  the 
fixed  charges  is  measured  by  the  extent  to  which  the  cost  of  its  trans- 
portation fixes  its  market  value  and  determines  the  question  of  its 
movement.  In  the  case  of  commodities  such  as  coal,  stone,  ore,  beef, 
corn,  lumber,  &c.,  the  freight  charge  constitutes  the  principal  item  of 
the  cost  to  the  consumer,  and  however  small  may  be  his  contribution 
to  the  general  burden,  it  is  relatively  greater  than  that  made  by  the 
consumer  of  high-priced  articles,  such  as  clothing  or  dry  goods,  for  in- 
stance, the  selling  price  of  which  is  not  appreciably  affected  by  the 
freight  charge,  even  though  unreasonably  high. 

This  principle,  which  applies  to  every  article  of  shipment,  has  been 
justly  made  odious  by  the  railroads,  because  they  have  pleaded  it  in 
justification  of  unreasonable  discriminations,  and  they  have  applied 
it  in  such  a  manner  that  it  has  become  known  as  "  taxing  the  traffic  at 
what  it  will  bear."  Fairly  construed  and  applied,  it  does  not  justify  the 
exaction  of  the  highest  rate  that  can  be  obtained,  as  the  popular  state- 
ment of  the  principle  would  indicate,  but  only  the  exercise  of  such  dis- 
crimination as  is  unavoidable  because  rates  on  many  articles  are  limited 
by  "  what  the  traffic  will  not  bear." 

It  is  this  limitation  which  occasions  variations  in  the  rates  charged 
upon  different  articles  when  transported  equal  distances  in  like  quanti- 
ties under  similar  circumstances,  and  which  necessitates  the  classifica- 
tion of  freights. 

THE  CLASSIFICATION  OF  FREIGHTS. 

The  purpose  of  the  classification  is  to  determine  the  relative  differ- 
ences in  the  contributions  which  different  articles  should  make  towards 
the  payment  of  the  fixed  charges,  and  to  simplify  the  difficulty  of  rate- 


186  INTERSTATE   COMMERCE. 

making  by  grouping  together  those  which  are  handled  at  about  the 
same  average  expense,  and  should  rightfully  make  the  same  contribu- 
tions towards  the  general  burden.  The  freight  classification  is  an  essen- 
tial part  of  the  tariff  or  schedule  of  rates.  The  tariff  fixes  the  rate  upon 
the  articles  in  each  class  for  given  distances  and  quantities.  The  classi- 
fication, by  grouping  every  known  article  of  shipment  into  classes,  de- 
termines in  that  way  the  rates  to  be  charged  upon  each.  Therefore,  a 
change  in  the  tariff  affects  the  rate  on  all  the  numerous  articles  included 
in  the  class  or  classes  to  which  the  change  applies,  while  a  change  in  the 
classification  of  any  article  is  limited  in  its  effect  to  the  .particular  ar- 
ticle thereby  transferred  to  a  lower  or  higher  class. 

Classification  implies  variation,  and  the  discrimination  which  perme- 
ates the  entire  system  of  railroad  rates  may  fairly  be  said  to  have  its 
foundation  in  the  classification  of  freights.  In  the  arrangement  of  a 
classification  all  the  conditions  that  necessitate  variations  in  rates  may 
rightfully  receive  consideration.  These  are  of  almost  endless  variety, 
and  too  numerous  to  be  readily  stated.  Nor  is  it  easy  to  concisely  in- 
dicate their  nature  and  extent.  Even  before  arbitrary  discriminations 
are  resetted  to,  variations  based  solely  on  differences  in  the  cost  of  the 
service  will  be  found  necessary,  which  will  often  appear  unduly  discrim- 
inating, for  the  reason  thab  the  rates  do  not  merely  cover  the  expense  of 
hauling  the  freight  from  one  point  to  another,  but  include  what  are  usu- 
ally called  terminal  charges,  or  the  expenses  of  loading,  unloading,  and 
handling,  and  of  the  station  service  at  the  two  points.  Some  curious 
results  were  shown  by  an  investigation  made  by  Mr.  O.  Chanute,a  civil 
engineer,  into  the  time  actually  employed  and  the  expense  for  labor  there- 
by incurred  in  unloading  and  loading  freight  at  one  of  the  depots  in  Jer- 
sey City.  While  his  figures  are  only  approximate,  they  indicate  that  the 
influence  of  the  shape  and  weight  of  the  package  upon  the  cost  of  hand- 
ling is  much  greater  than  would  be  supposed.  Boiling  freight,  it  was 
found,  was  unloaded  much  more  cheaply  than  any  other.  For  instance, 
the  tally  kept  showed  that  the  cost  of  unloading  tierces  was  4  cents  per 
ton  and  of  barrels  6  cents,  as  against  24  cents  per  ton  for  light  boxes. 
The  increased  cost  of  handling,  occasioned  by  increased  size  and  weight, 
was  illustrated  in  the  case  of  marble,  the  cost  of  unloading  blocks  of  me- 
dium size  being  54  cents  per  car  and  of  large  blocks  $1.88  per  car.  A 
still  greater  difference  was  exhibited  in  the  case  of  leather,  the  cost  of 
unloading  a  car  of  leather  in  rolls  being  given  at  81  cents  and  of  leather 
in  loose  sides  at  $5.76.  The  classification,  therefore,  may  properly  take 
into  account  the  shape  in  which  freight  is  offered  for  shipment  and  vary 
the  charges  on  the  same  articles  accordingly. 

There  are  many  other  differences  that  may  fairly  be  considered  as 
affecting  the  cost  of  the  service  performed.  On  articles  easily  damaged 
and  requiring  special  care  in  handling,  or  on  those  of  high  value,  the 
carrier  is  entitled  to  additional  compensation  on  account  of  the  risk 
incurred  in  assuming  the  responsibility  for  their  safe  transshipment. 
When  all  these  considerations,  and  many  others  that  could  be  men- 
tioned, have  been  fairly  taken  into  account,  it  will  be  found  that  some 
articles  will  pay  several  times  as  much  as  others  of  similar  weight  and 
value,  although  apparently  they  can  be  handled  at  no  greater  expense, 
and  that  the  cheaper  and  heavier  commodities  have  probably  taken  as 
high  a  rate  as  they  can  stand  even  without  any  arbitrary  discrimination 
against  them. 

Tha.ttbe  classifications  now  in  use  have  been  fairly  arranged  with  due 
regard  to  all  the  considerations  which  have  been  alluded  to  cannot  be 
justly  claimed  by  the  railroad  authorities.  In  many  instances  it  is  dif- 


INTERSTATE    COMMERCE.  187 

ficult  to  ascertain  the  principles  upon  which  they  have  been  adjusted  or 
the  reasons  that  originally  dictated  the  marked  differences  that  have 
often  characterized  the  rates  upon  articles  of  a  similar  character.  Dif- 
ferences have  been  preserved  by  custom  for  which  the  original  reason, 
if  any  existed,  ha*  been  forgotten,  with  the  result  that  they  now  appear 
arbitrary  and  unreasonable.  The  tariffs  of  the  present  day  are  a  great 
advance  upon  those  of  a  few  years  ago,  but  there  is  yet  ample  room  for 
improvement.  They  have  been  a  gradual  growth,  modified  and  im- 
proved from  time  to  time  as  the  principles  that  should  govern  their  ad- 
justment have  become  better  understood,  and  as  circumstances  have 
seemed  to  make  changes  expedient,  but  they  are  yet  too  largely  arbi- 
trary. 

Under  existing  methods  the  railroad  officials  are  the  sole  judges  of  the 
weight  that  should  properly  be  given  to  the  almost  endless  variety  of 
conditions  and  circumstances  which  influence  variations  in  rates.  Upon 
such  questions  disinterested  persons  will  honestly  disagree,  and  there  is 
ample  room  for  differences  of  opinion.  Is  it  any  wonder,  then,  that  the 
judgment  of  the  officials  should  often  prove  imperfect,  and  that  in  the 
hurry  of  business  mistakes  should  be  made  ?  Or  is  it  to  be  wondered  at 
that  the  shipper,  having  had  no  voice  in  the  determination  of  the  ques- 
tions involved,  and  not  informed  as  to  their  nature,  should  be  disposed 
to  complain  of  variations  which  he  is,  from  his  point  of  observation, 
unable  to  comprehend  or  account  for  except  on  the  ground  of  unjust 
discrimination  ? 

The  committee  has  at  considerable  length  pointed  out  the  great  di- 
versity of  elements  that  enforce  variations  in  rates,  not  to  justify  or  ex- 
cuse the  inequalities  which  exist,  but  to  call  attention  to  the  almost 
unlimited  opportunities  for  arbitrary  and  unreasonable  discriminations 
which  are  afforded  the  railroads  by  the  fact  that  differences  in  rates 
must  exist,  that  they  are  the  only  judges  of  what  differences  are  neces- 
sary, and  that  it  is  difficult,  if  not  impossible,  to  determine  when  the 
differences  they  establish  at  their  own  discretion  are  purely  arbitrary 
and  when  they  are  justifiable,  without  fuller  knowledge  of  the  circum- 
stances than  the  shipper  is  able  to  obtain. 

The  difficulty  of  obtaining  this  information,  even  without  regard  to 
the  intricacy  of  the  subject,  is  greater  than  would  at  first  thought  ap- 
pear. It  should  be  remembered  that  the  vast  majority  of  shippers  must 
deal  with  subordinate  agents,  whose  only  duty  is  to  carry  out  their  in- 
structions, and  who  are  unable  to  give  the  desired  information  even  if 
disposed  to  do  so.  Nor  is  it  always  easy  for  the  ordinary  shipper  to  reach 
the  officials  in  control  of  a  great  corporation,  nor  do  their  inquiries  and 
complaints  always  receive  attention  and  consideration,  as  they  would,  if 
communicated  through  authorized  representatives  of  the  public. 

UNIFORMITY  OF  CLASSIFICATION. 

This  is  particularly  the  case  with  regard  to  the  questions  involved  in 
the  classification  of  freights.  These  present  so  many  opportunities 
for  arbitrary  discrimination,  that  the  committee  believe  it  essential 
that  any  method  which  may  be  decided  upon  for  the  prevention  ot 
unjust  discrimination  should  include  the  regulation  of  the  classifica- 
tion, which  begins  and  ends  upon  a  basis  of  discrimination. 

Distinct  classifications  were  originally  used  by  almost  every  rail- 
road, and  the  great  advance  made  in  recent  years  by  the  adoption 
of  uniform  classifications  by  the  various  pooling  associations  furnishes 
the  best  evidence  that  could  be  desired  that  further  improvement  is 


188  INTERSTATE    COMMERCE. 

possible.  Marked  differences  have  been  found  in  the  classifications  in 
use  in  different  parts  of  the  country  for  which  no  satisfactory  reasons 
have  been  given  by  the  railroad  officials,  and  which  are  accounted  for 
only  by  the  fact  that  the  different  classifications  are  arranged  independ- 
ently and  that  the  judgments  of  men  differ  upon  these  ^natters  as  widely 
as  upon  any  other. 

This  want  of  uniformity  may  be  made  the  means  of  extortion  and 
overcharge,  and  is  in  any  event  a  fruitful  source  of  misunderstanding, 
especially  when,  as  is  the  case  on  the  trunk  lines,  different  classifications 
are  used  for  east-bound  and  west-bound  shipments.  Uniformity  in  this 
respect  has  been  asked  for  almost  unanimously  by  shippers.  It  is  cer- 
tainly much  to  be  desired,  and  the  committee  believes  that  it  is  entirely 
practicable  as  to  the  commodities  composing  the  great  bulk  of  the  inter- 
State  shipments,  but  the  difficulty  encountered  has  been  how  to  provide 
for  or  to  require  uniformity  without  specifically  prescribing  the  classifi- 
cation that  shall  be  adopted,  or  without  giving  a  commission  authority 
to  establish  a  classification,  which  would  be  equivalent  to  authorizing 
such  commission  to  fix  rates.  Inasmuch,  however,  as  the  accompany- 
ing bill  makes  provision  for  the  publication  of  classifications,  as  well  as 
tariffs,  under  the  direction  of  the  proposed  commission,  it  is  believed 
that  this  requirement  will  secure  greater  uniformity,  and  as  any  unreas- 
onable charges  resulting  from  an  inequitable  classification  can  be  regu- 
lated under  the  general  provisions  covering  those  questions,  no  specific 
enactment  in  relation  to  uniformity  of  classifications  has  been  deemed 
necessary. 

DISCRIMINATIONS  BETWEEN  PERSONS. 

Differences  in  rates  between  different  commodities  of  a  similar  char- 
acter are  often  unavoidable  and  justifiable,  as  has  been  shown,  but  no 
excuse  can  be  offered  for  any  discrimination  in  the  charges  made  by  a 
common  carrier  as  between  persons  similarly  situated  for  whom  a  like 
service  is  performed  under  similar  circumstances.  This  is  the  most 
flagrant  and  reprehensible  form  of  arbitrary  discrimination.  Individual 
favoritism  is  the  greatest  evil  chargeable*  against  the  management  of 
the  transportation  system  of  the  United  States.  The  evidence  before 
the  committee  shows  that  it  has  come  to  be  considered  by  railroad  offi- 
cials as  an  indispensable  feature  of  the  system  upon  which  their  busi- 
ness is  now  carried  on,  and  reveals  its  existence  to  an  extent  that  im- 
peratively demands  additional  legislation  to  protect  the  people  in  their 
common-law  rights  and  to  insure  them  the  equal  enjoyment  of  the  advan- 
tages of  transportation. 

One  reference  to  the  testimony  must  suffice  to  illustrate  the  univer- 
sality of  individual  favoritism,  the  reasons  which  influence  the  railroads 
in  favoring  one  shipper  to  the  ruin  of  another,  and  the  injustice  of  the 
system.  Mr.  C.  M.  Wicker,  of  Chicago,  a  former  railroad  official  of  many 
years'  experience,  was  asked  if  he  knew  anything  of  discriminations 
upon  the  part  of  transportation  companies  as  between  individuals  or  lo- 
calities, and  testified  as  follows: 

Mr.  WICKER.  Yes;  I  do.  And  this  discrimination,  by  reason  of  rebates,  is  a  part  of 
the  present  railroad  system.  I  do  not  believe  the  present  railway  system  could  be 
conducted  without  it.  Roads  coming  into  the  field  to-day  and  undertaking  to  do 
business  on  a  legitimate  basis  of  billing  the  property  at  the  agreed  rates  would  simply 
result  in  getting  no  business  in  a  short  time. 

Senator  HARRIS.  Then,  regardless  of  the  popularly  understood  schedule  rates,  prac- 
tically it  is  a  matter  of  underbidding  for  business  by  way  of  rebates? 

Mr.  WICKER.  Yes,  sir;  worse  than  that.  It  is  individual  favoritism;  the  building 
up  of  one  party  to  the  detriment  of  the  other.  I  will  illustrate.  I  have  been  doing 
it  myself  for  yean,  and  had  to  do  it. 


INTERSTATE    COMMERCE.  189 

Senator  HARRIS.  Doing  it  for  yourself  in  your  position? 

Mr.  WICKER.  I  am  speaking  now  of  when  I  was  a  railroad  man.  Here  is  quite  a 
grain  point  in  Iowa,  wliere  there  are  five  or  six  elevators.  As  a  railroad  man,  I  would 
try  and  hold  all  those  dealers  on  a  "level  keel,"  and  give  them  all  the  same  tariff  rate. 
But  suppose  there  was  a  road  5  or  6  or  8  miles  across  th,e  country,  and  those  dealers 
should  begin  to  drop  in  on  me  every  day  or  two  and  tell  me  that  that  road  across  the 
country  was  reaching  within  a  mile  or  two  of  our  station  and  drawing  to  itself  all  the 
grain.  You  might  say  that  it  would  he  the  just  and  right  thing  to  do  to  give  all  the  five 
or  six  dealers  at  this  station  a  special  rate  to  meet  that  competition  through  the  coun- 
try. But,  as  a  railroad  man,  I  can  accomplish  the  purpose  hotter  by  picking  out  one 
good,  smart,  live  man,  and,  giving  him  a  concession  of  three  or  four  cents  a  hundred, 
let.  him  go  there  and  scoop  the  business.  I  would  get  the  tonnage,  and  that  is  what 
I  want.  But  if  I  give  it  to  the  five,  it  is  known  in  a  very  short  time.  "  *  *  When 
you  take  in  these  people  at  the  station  on  a  private  rebate  you  might  as  well  make  it 
public  and  lose  what  you  intend  to  accomplish.  You  can  take  hold  of  one  man  and 
build  him  up  at  the  expense  of  others,  and  the  railroad  will  get  the  tonnage. 

Senator  HARRIS.  The  effect  is  to  build  that  one  man  up  and  destroy  the  others? 

Mr.  WICKER.  Yes,  sir ;  but  it  accomplishes  the  purposes  of  the  road  better  than  to 
build  up  the  six. 

Senator  HARRIS.  And  the  road,  in  seeking  its  own  self-preservation,  has  resorted 
to  that  method  of  concentrating  the  busfnesB  into  the  hands  of  one  or  of  a  few  to  the 
destruction  of  the  many  ? 

Mr.  WICKER.  Yes,  sir;  and  that  is  a  part  and  parcel  of  the  system. 

Senator  HARRIS.  Is  that  system  continued  up  to  this  time? 

Mr.  WICKER.  Yes,  sir. 

Senator  HARRIS.  That  is  the  method  by  which  transportation  is  being  conducted 
at  this  time  by  the  railroads? 

Mr.  WICKER.  Very  largely.  Where  they  form  a  pool  and  maintain  that  pool  they 
do  away  with  that  method.  So,  I  say,  the  pool  is  to  the  advantage  of  the  public ;  it 
puts  everybody  on  an  even  keel. 

The  CHAIRMAN.  Provided  it  is  lived  up  to  by  the  railroad  companies? 

Mr.  WICKER.  Yes,  sir.  Then  put  a  commission  over  that  pool  to  see  that  the  rate 
is  just  and  right,  and  I  think  you  have  approached  nearer  to  justice  than  by  any  other 
way.  (Testimony,  p.  778.) 

That  personal  discrimination  is  unavoidable  is  not  claimed  and  can- 
not be  admitted.  Competition  does  not  prevent  it,  for  the  evil  is  most 
conspicuous  when  and  where  competition  is  most  active.  Pooling  has 
not  prevented  it,  although  that  is  claimed  to  be  one  of  its  objects,  for 
the  most  rigid  pooling  compacts  have  not  enforced  general  adherence 
to  agreed  and  published  rates.  Kegulatiou,  therefore,  seems  to  be  the 
only  remedy  that  can  be  relied  on. 

The  practice  prevails  so  generally  that  it  has  come  to  be  understood 
among  business  men  that  the  published  tariffs  are  made  for  the  smaller 
shippers  aud  those  unsophisticated  enough  to  pay  the  established  rates; 
that  those  who  can  control  the  largest  amounts  of  business  will  be  al- 
lowed the  lowest  rates;  that  those  who,  even  without  this  advantage, 
can*  get  on  "the  inside,"  through  the  friendship  of  the  officials  or  by  any 
other  moans,  can  at  least  secure  valuable  concessions;  and  that  the 
most  advantageous  rates  are  to  be  obtained  only  through  personal  in- 
fluence or  favoritism  or  by  persistent  "bulldozing." 

It  is  in  evidence  that  this  state  of  aft  airs  is  far  from  satisfactory,  even 
to  those  specially  favored,  who  can  never  be  certain  that  their  compet- 
itors do  not,  cr  at  any  time  may  not,  receive  even  better  terms  than 
themselves.  Not  a  few  large  shippers  who  admitted  that  they  were  fe- 
rn ving  favorable  concessions  testified  that  they  would  gladly  surrender 
the  special  advantages  they  enjoyed  if  only  the  rates  could  be  m,aa> 
public  and  alike  to  all. 


190  INTERSTATE    COMMERCE. 

This  suggests  the  remedy  that  should  be  applied,  and  the  question 
of  securing  publicity  of  rates  will  be  considered  hereafter.  The  secrecy 
which  attends  these  transactions  is  the  only  evidence  that  is  needed  oi' 
their  injustice.  The  uncertainty  as  to  the  rates  actually  charged  which 
the  system  of  personal  favoritism  occasions  is  demoralizing  to  all  legiti- 
mate business,  and  is  calculated  to  encourage  only  that  which  is  purely 
speculative. 

The  methods  by  means  of  which  personal  favoritism  may  be  indulged 
in  are  limited  in  variety  only  by  the  ingenuity  and  inventive  capacity 
of  the  railroad  officials.  Its  most  common  manifestation  is  in  the  form 
of  special  contracts,  special  rates,  rebates,  uuderbilliug,  and  other  secret 
devices  for  evading  the  schedule  rates;  but  it  is  possible  to  accomplish 
the  same  purpose  in  so  many  different  ways,  when  desired,  that  the  ab- 
solute prevention  of  the  practice  will  be  attended  with  no  little  difficulty. 

Fully  appreciating  these  difficulties,  the  committee  believes  that 
every  effort  possible  should  be  put  forth  by  Congress  to  secure  equality 
between  man  and  man  in  respect  to  the  matter  of  transportation,  and 
that  one  means  to  that  end  would  be  the  prohibition  of  persdual  pref- 
erences under  suitable  penalties,  which  should  be  supplemented  by 
proper  provisions  for  securing  publicity  of  rates.  Commerce  can  and 
does  adjust  itself  to  inequalities  of  every  description,  but  it  cannot  pros- 
per or  be  carried  on  legitimately  while  individual  favoritism  controls 
the  distribution  of  the  advantages  of  transportation. 

CONCESSIONS  TO  LARGE   SHIPPERS. 

Discriminations  between  shippers  similarly  situated  on  account  of 
quantity  and  distance  are  universal,  and  as  to  these  a  great  difference  of 
opinion  has  been  found  to  exist.  Such  discriminations  are  defended  by 
the  railroads  on  the  ground  that  large  shipments  for  long  distances  are 
in  the  nature  of  wholesale  business;  that  they  are  handled  at  less  ex- 
pense, and  are  more  desirable  at  a  smaller  average  profit  than  an  equal 
quantity  of  miscellaneous  shipments,  for  the  same  reasons  that  it  is 
preferable  to  transact  business  on  a  large  scale  with  a  limited  number 
rather  than  on  a  small  scale  with  many  customers,  and  that  the  more 
active  competition  for  business  of  this  character  compels  the  acceptance 
of  relatively  lower  rates. 

Railroad  usage  has  made  the  car-load  the  unit  of  shipment,  and  cus- 
tom has  sanctioned  the  allowance  of  reductions  varying  from  10  to  150 
per  cent,  on  the  car-load  rate  from  that  charged  upon  less  quantities  of 
the  same  commodity.  The  higher  rate  on  the  smaller  shipments  is 
claimed  as  compensation  for  the  supposed  greater  cost  of  handling  and 
the  possible  loss  of  space  by  not  having  a  car  so  well  filled.  In  actual 
practice  all  freight  except  live  stock  is  shipped  by  weight  and  charged 
:  for  by  the  hundred  pounds,  because  of  the  great  differences  in  the  size 
of  the  cars  used.  The  cars  built  in  recent  years  are  much  larger  than 
formerly,  and  every  road  has  in  use  cars  of  so  many  different  sizes  that 
it  is  impracticable  to  establish  a  standard.  A  carload  may  mean 
20,000,  30,000,  40,000,  or  even  60,000  pounds,  while  a  car-load  of  \tool 
would  mean  perhaps  7,000  or  8,000  pounds.  Therefore  when  a  car- 
load rate  is  established  on  any  commodity  it  applies  to  that  commodity 
when  shipped  in  car-load  lots,  or  in  quantities  that  usually  constitute; 
a  car-load.  One  car  may  contain  20,000  pounds  of  that  commodity 
and  the  next  one  30,000  or  possibly  even  40,000  pounds,  and  the  classi- 
fication frequently  specifies  the  minimum  weight,  that  shall  be.  en- 
titled to  a  car  load  rate.  As  freight  is  virtually  now  shipped  by  the  hun- 
dred pounds  in  most  instances,  it  has  been  urged  that  that  should  IK? 
made  the  unit  of  shipment  instead  of  the  car-load.  Reference  is  made 


INTERSTATE    COMMERCE.  191 

to  the  testimony  of  Mr.  C.  II.  Wicker,  commissioner  of  the  Chicago 
Freight  Bureau  (Testimony,  p.  759),  in  which  this  question  is  fully  dis- 
cussed, and  to  the  reasons  advanced  by  the  jobbers  of  Des  Moines, 
whose  business  would  be  seriously  affected  by  the  proposed  change, for 
the  continuance  of  the  present  system  of  car  load  rates. 

A  more  unjust  form  of  discrimination  on  account  of  quantity  is  ex- 
hibited in  the  concessions  made  by  all  roads  to  shippers  handling  large 
amounts  of  freight  in  car-load  lots.  While  it  may  be  more  convenient 
to  manage  a  train-load  destined  to  one  consignee  for  one  shipper  than 
an  equal  number  of  cars  forwarded  by  twenty  tive  shippers  to  as  many 
consignees  at  the  same  point,  there  is  apparently  little  if  any  difference 
in  expense  to  the  carrier.  •  Besides,  such  shipments  are  the  exception, 
not  the  rule;  and  in  the  great  majority  of  cases  where  concessions  to 
large  shippers  are  excused  on  this  ground,  as  a  matter  of  fact  but  a  few 
cars  are  forwarded  at  a  time,  and  discriminations  are  made  in  favor  of 
men  whose  shipments  are  handled  in  exactly  the  same  way  as  their  com- 
petitors, but  who  contract  to  forward  a  larger  number  of  cars  in  a  month 
or  a  year;  and  they  are  enabled  to  control  the  market  and  make  these 
larger  shipments  becausethey  securesuch  contracts  and  such  concessions. 

The  committee,  however,  does  not  deem  it  necessary  to  recommend 
any  legislation  for  the  determination  of  the  unit  of  shipment,  believing 
that  unreasonable  discriminations  on  account  of  quantity  should  be  in- 
vestigated and  can  be  dealt  with  in  the  same  manner  and  by  the  same 
methods  that  will  be  suggested  for  the  prevention  of  unjust  discrimina- 
tion in  any  other  form. 

We  are,  however,  emphatically  of  the  opinion  that,  while  the  car- 
load remains  the  unit,  the  rates  upon  one  car-load  or  upon  any  greater 
number  should  be  the  same;  that  any  concessions  allowed  on  account 
of  quantity  should  be  made  as  public  as  the  established  rates,  and  that 
the  discriminations  universally  practiced  in  favor  of  the  larger  ship- 
pers are  unjust  and  prejudicial  to  the  public  interest,  because  their 
tendency  is  to  unduly  concentrate  the  control  of  commerce  in  the  hands 
of  the  few. 

DISCRIMINATIONS  BETWEEN  PLACES. 

Universal  complaint  has  been  made  to  the  committee  as  to  the  dis- 
criminations commonly  practiced  against  places  and  a's  to  the  conspic- 
uous discrepancies  between  what  are  usually  termed  "local"  rates  and 
what  are  known  as  "through"  rates. 

There  can  be  no  controversy  as  to  the  fact  that  the  differences  shown 
to  exist  in  these  particulars  are  unequal,  unreasonable,  and  in  many 
places  oppressive.  The  proper  adjustment  of  these  inequalities,  occa- 
sioned, as  they  are,  by  differences  in  the  advantages  and  facilities  en- 
joyed by  different  localities,  by  the  varying  effects  of  competition  at 
different  points,  and  by  the  allowances  generally  made  on  account  of 
quantity  as  well  as  distance,  is  not  easily  determined  in  the  case  of  a 
single  railroad  considered  by  itself,  and  the  difficulties  are  vastly  in- 
creased when  an  effort  is  made  to  determine  the  principles  that  should 
govern  the  differentiation  of  rates  upon  the  component  parts  of  the 
entire  railroad  system  of  the  United  States.  All  the  considerations 
which  contribute  to  produce  inequalities  in  rates  upon  each  separate 
road  gain  irresistible  strength  through  the  controlling  influence  of  com- 
petition in  effecting  differences  between  the  comparative  charges  made 
upon  the  hundreds  of  lines  of  varying  earning  capacity  which  compose 
the  entire  system. 

Competition  has  been  looked  upon  as  a  safeguard  against  extortion, 
and  in  this  respect  it  has  proved  effective  where  it  has  existed  and  when 


192  INTERSTATE    COMMERCE. 

its  operation  has  not  been  unduly  restricted.  But  experience  has  shown 
.  that  it  is  no  safeguard  against  discrimination.  It  cannot  accomplish 
both  purposes;  but,  on  the  contrary,  where  it  prevents  extortion  it  pro- 
duces discrimination,  for  the  reason  that  the  same  degree  of  competi- 
tion cannot  exist  at  all  points. 

It  is  not  unreasonable  that  there  should  be  a  considerable  disparity 
between  the  charges  made  upon  short  local  hauls  and  those  upon  the 
transportation  of  the  food  products  of  the  country  across  the  continent; 
but  the  inequality  made  necessary  for  the  common  welfare  does  not  jus- 
tify arbitrary  discrimination  against  local  shipments  or  the  carrying  ot 
transcontinental  traffic  at  less  than  cost  at  the  expense  of  the  former. 
[The  simple  fact  that  differences  exist  which,  to  the  local  shipper,  seem 
s  unreasonable,  does  not  necessarily  establish  the  charge  of  unjust  dis- 
/  crimination  against  him.     If  itweie  possible  to  establish  rates  upon  all 
^— the  railroads  of  the  United  States  based  strictly  upon  the  cost  of  the 
service  in  every  case,  it  is  not  improbable  that  maoy  lines  in  the  West 
and  South  would  be  obliged  to  make  as  great  an  aggregate  charge  for 
carrying  grain  a  hundred  miles  as  the  great  trunk  lines,  with  their  su- 
perior facilities  and  immense  volume  of  business,  would  make  for  carry- 
ing the  same  commodity  a  thousand  miles. 

Each  railroad  is  entitled  to  reasonable  rates,  and  all  that  can  be  re- 
quired of  it  is  that  they  shall  be  reasonable.  What  is  a  reasonable  rate 
on  one  does  not  necessarily  determine  what  is  reasonable  upon  another 
less  favorably  situated  and  of  lesser  earning  capacity.  Equality  in  the 
charges  made  upon  the  same  commodity  for  equal  distances  by  differ- 
ent lines  in  the  East,  in  the  West,  and  in  the  South  cannot  equitably 
be  required,  nor  is  it  the  province  of  legislation  to  attempt  to  place  those 
remote  from  a  market  and  poorly  supplied  with  transportation  facilities 
upon  an  equality  with  those  within  easy  reach  of  a  market  and  enjoy- 
ing every  facility  in  the  matter  of  transportation.  It  is  not  practicable 
to  secure  uniformity  of  rates  as  between  places  differently  situated  upon 
the  hundreds  of  railroads  within  the  United  States,  nor  has  it  been  pos- 
sible to  secure  such  equality  even  within  the  limits  of\a  single  State. 
In  New  Hampshire,  for  example,  the  railroad  commissioners  have  fixed 
the  maximum  rate  per  mile  that  may  be  charged  for  the  transportation 
of  passengers  upon  each  railroad  in  the  State.  (See  p.  117.)  With  full 
power  to  say  what  the  rates  upon  each  road  should  be,  the  commis- 
sioners allow  one  railroad  to  charge  its  passengers  $1  per  mile,  while 
others  are  restricted  to  a  charge  of  2£  cents  per  mile.  It  is  true  that 
this  is  an  extreme  case,  but  it  illustrates  in  a  striking  way  the  circum- 
stances that  may  justify  variations  in  rates  lor  similar  distances  upon 
different  roads,  and  the  principle  remains  the  same,  even  when  the  dif- 
ferences of  condition  are  not  as  apparent  as  are  those  between  an  aver- 
age road  and  that  running  up  the  steep  sides  of  Mount  Washington, 
and  depending  upon  passenger  traffic  for  its  support. 

It  is  plain,  also,  that  the  proper  and  equitable  adjustment  of  the  ex- 
isting differences  between  through  and  local  rates  should  be  determined 
with  reference  to  their  influence  upon  the  whole  internal  and  foreign 
commerce  of  the  United  States  rather  than  with  regard  only  to  their 
effect  upon  the  immediate  local  interests  of  a  particular  State  or  com-: 
muuity.  The  general  considerations  of  this  character  which  may  right- 
fully be  taken  into  account  are  suggested  in  the  following  paragraphs 
from  the  statement  received  from  the  railroad  commissioners  of  Kansas : 

TWO   CLASSES  OK  INTKRSTATK  TUAFFIC. 

There  are  two  classes  of  intt-nstuto  tnillic  over  railroad  lines,  viz:  Commerce  from 
and  to  points  ill  the  interior  to  and  li-oru  the  seaboard,  and  commerce  that  crosses 
fttate  lines  bat  [a  still  local.  In  the  former  case  the  great  bulk  of  the  commerce  is 


; 


INTERSTATE    COMMERCE. 

carried  over  gl^ai  distances,  crossing  a  number  of  State,  lines,  ami  employing  sev- 
eral connecting  roadn  to  eotfiplete  the  transit.  In  the  other  the  freight  is  carried 
from  a  point  in  one  State  to  a  point  in  an  adjoining  State.  It  is  obvious  that  rates 
adapted  to  the  hauling  of  heavy  and  bulky  products,  comprising  the  leading  pro'- 
•  ductions  of  the  country,  over  great  distances,  either  for  Eastern  consumption  or  for- 
eign export,  would  furnish  no  criterion  or  basis  for  a  system  of  rates  for  the  traius- 
;porta1ion  of  the  same  products  comparatively  short  distances  between  points  in  ad- 
joining States  in  the  interior.  These  products  must  of  necessity  be  moved  at  very 
low  rates,  at  rates  that  do  not  remunerate  the  companies  engaged  in  the  work  of 
transportation,  but  only  furnish  a  small  margin  of  profit  over  the  bare  expenses  in- 
curred in  the  performance  of  the  service,  from  the  fact  that  they  arc  moved  very 
great,  distances.  The  great  cereal  crops  raised  in  the  Mississippi  Valley  and  the  meat 
products  in  the  trans-Mississippi,  in  the  continued  production  of  which  the  country 
is  vitally  interested,  can  only  be  maintained  by  a  system  of  rates  for  their  transpor- 
tation to  the  seaboard  which,  while  they  involve  no  absolute  loss  but  rather  a  small 
margin  of  profit,  would,  if  the  same  rates  were  obligatory  upon  them  as  to  all  traffic 
carried  over  their  lines,  consign  every  road  engaged  in  the  business  into  absolute 
bankruptcy. 

/*^It  is  a  fact  known  to  every  man  who  has  given  any  thought  to  the  subject  that  the 
rates  now  prevailing  upon  that  part  of  interstate  commerce  which  is  concerned  with 
the  movement,  of  Western  products  to  the  Eastern  seaboard  are  very  much  lower  thau 
were  ever  before  devised  by  any  railroad  in  the  world,  so  low,  in  fact,  that  were  rates 
on  their  local  traffic  proportioned  or  adjusted  to  these  transcontinental  rates  there  is 
no  road  now  in  existence  in  this  country  that  could  derive  sufficient  revenue  from  its 
business  to  pay,  in  addition  to  its  operat  ing  expenses,  its  fixed  charges. 

THE   TWO   ALTERNATIVES. 

To  devise  a  system  of  maximum  rates,  covering  every  species  of  interstate  traffic, 
on  the  basis  of  rates  for  long  hauls  from  the  extreme  West  to  the  East  would  par- 
alyze every  railroad  engaged  in  the  business.  On  the  other  hand,  to  equalize  the 
rates  as  between  long  and  short  hauls,  i.  e.,  to  introduce  a  proportionate  equality  in 
the  rates  between  local  and  continental  interstate  traffic,  would,  if  railroad  property 
>  is  to  be  preserved  and  its  efficiency  maintained,  advance  the  rates  on  great  distances 
to  such  an  extent  as  to  put  an  embargo  upon  the  movement  of  the  cereal  crops  of  the 
extreme  West  or  the  trans-Mississippi  region,  a  result  which  would  be  little  less  dis- 
\  astrous  to  the  East  than  to  the  West. 

It  has  been  rendered  possible  for  the  great  West  to  reach  a  rapid  and  prosperous 
development  by  a  system  of  low  rates  upon  the  movement  of  the  leading  productions 
of  that  region  to  tide-water.  The  attractions  of  the  West,  enhanced  and  made  avail- 
able by  the  unparalleled  creation  of  railroad  facilities,  have  induced  a  movement  of 
population  from  the  East  to  the  West,  thus  relieving  an  overburdened  labor  market 
and  reducing  those  causes  of  discontent  and  restlessness  among  the  employed  laborers 
of  the  country  that  eventuate  in  serious  disturbances  to  her  established  industries 
and  frequently  threaten  the  public  peace. 

On  the  other  hand,  the  abundant  production  of  food,  by  the  utilization  of  the  West- 
ern lands,  and  its  cheap  distribution  by  railway  lines  to  remote  distances,  lighten  the 
burdens  of  the  laborer  and  increase  the  ability  of  the  country  to  carry  on  its  indus- 
trial development. 

It  will  be  seen  that  the  benefits  derived  from  the  low  system  of  rates  prevailing  on 
the  great  movements  of  food  products,  as  compared  with  rates  upon  movements  more 
local  in  character,  are  shared  by  each  section  of  the  country.  And  since  these  bene- 
fits are  felt  alike  in  every  part  of  the  country,  it  is  no  unjust  discrimination  to  dis- 
criminate in  the  charges  made  upon  long  and  short  hauls. 

It  may  be  further  remarked  that  this  differentiation  in  rates  is  a  result  that  has 
been  brought  about  by  no  conventional  or  voluntary  arrangement  between  compa- 
nies operating  interstate  lines  of  railway.  But  it  has  been  forced  by  the  natural 
laws  of  commerce  operating  upon  geographical  lines,  and  which  cannot  be  ihanged 
without  changing  the  distribution  of  land  and  water  on  the  continent,  or  by  annihi- 
lating distance  without  the  aid  of  steam  ;  and  any  attempt  by  the  law-making  power 
to  contravene  these  natural  laws,  thus  necessitated  by  our  geographical  situation, 
would  end  in  disastrous  derangement  of  our  commercial  system.  (Appendix,  p.  3.) 

S,  Eep.  46 13 


194  INTERSTATE    COMMERCE. 

THE  FIXING  OF  HATES  BY  LEGISLATION  IMPRACTICABLE. 

When  all  these  considerations  have  been  given  Hue  weight  the  con- 
clusion seems  irresistible  that  a  very  considerable  disparity  in  charges 
upon  different  railroads  is  inevitable,  and  that  it  would  be  inexpedient 
and  impracticable  to  attempt  to  adjust  existing  inequalities  by  any  sys- 
tem of  rates  established  by  legislation,  as  many  witnesses  have  sug- 
gested. It  has  certainty  been  shown  that  one  uniform  tariff  for  all  inter- 
state railways  would  not  be  equitable,  nor  is  it  possible  to  conceive  how 
one  could  be  framed  under  which  they  could  all  be  operated  success- 
fully without  unduly  increasing  the  charges  and  profits  of  those  most 
favorably  situated.  If  the  expedient  should  be  adopted  of  attempting 
to  devise  a  limited  number  of  tariffs  for  groups  of  roads  it.  would  be 
found  that  the  same  exact  knowledge  as  to  each  would  be  required  to 
classify  them  fairly  as  to  construct  a  distinct  schedule  for  each,  and 
their  conflicting  interests  would  sooner  or  later  make  the  latter  plan 
necessary. 

In  either  case  it  would  be  impossible  to  avoid  taking  into  account 
the  considerations  which  absolutely  enforce  inequalities  in  rates,  and 
the  inevitable  result  of  any  attempt  to  establish  rates  by  legislation 
would  be,  as  it  always  has  been,  the  adoption  of  tariffs  arranged  upon  the 
same  general  principles  as  those  now  in  use,  and  perpetuating  the  sys- 
tem of  differential  rates  now  in  force.  The  most  that  could  be  gained, 
then,  would  be  a  revision  or  modification  of  existing  interstate  tariff's, 
while  no  reductions  could  be  effected  upon  the  local  rates  most  com- 
plained of,  except  when  they  applied  to  shipments  for  short  distances 
which  happened  to  cross  State  lines. 

But  another  serious  difficulty  presents  itself.  It  is  obviously  imprac- 
ticable for  Congress  to  resolve  itself  into  a  railroad  freight  office,  and 
undertake  to  establish  schedules  for  the  hundreds  of  interstate  lines  in 
the  United  States.  Those  who  have  asked  the  adoption  of  this  plan  of 
regulation  have  suggested  the  establishing  of  rates  by  a  commission, 
but  it  is  questionable  whether  a  commission  or  any  similar  body  of  men 
could  successfully  perform  a  work  of  such  magnitude,  involving,  as  it 
would,  infinite  labor  and  investigation,  exact  knowledge  as  to  thousands 
of  details,  and  the  adjustment  of  a  vast  variety  of  conflicting  inter- 
ests. 

The  committee  is  unable  to  see  that  advantages  would  accrue  to  the 
public  from  the  prescribing  of  a  system  of  maxima  rates  upon  interstate 
traffic,  and  is  forced  to  believe  that  the  only  result  of  a  maximum  rate 
high  enough  to  admit  of  the  successful  operation  of  the  poorest  roads 
would  be  to  justify  the  others  in  charging  more  than  they  now  do  when 
favorable  opportunities  were  presented.  Nor  has  it  been  made  to  ap- 
pear that  the  establishing  of  a  minimum  rate  would  be  of  advantage, 
while  consideration  has  made  it  clear  that  the  difficulties  attending  the 
adiustment  of  such  a  rate  would  be  no  less  formidable  than  those  en- 
countered in  establishing  complete  schedules  for  every  interstate  road, 
and  that  the  only  effect  of  a  minimum  rate  would  be  to  increase  the 
charges  for  long-distance  transportation. 

Believing  that  railroad  rates  should  be  established  in  the  first  instance 
by  the  railroad  officials,  and  tuat  any  attempt  to  provide  for  their  es- 
tablishment by  legislation  would  at  the  best  end  simply  in  securing  a 
revision  of  the  existing  tariffs,  the  committee  is  convinced  that  the 
same  purpose  can  be  better  accomplished  and  greater  advantages  to 
the  public  be  secured  with  less  friction  by  other  methods  of  regulation. 


INTERSTATE  COMMERCE.  195 

RATES  ON  LONG  AND  SHORT  HAULS. 

The  most  popular  remedy  proposed  for  the  prevention  of  unjust  dis-^ 
criminations  between  places  and  persons  on  account  of  distance  has  I 
been  what  is  called  a  ''short-haul  law,"  or  the  prohibition  of  a  greater/ 
aggregate  charge  for  a  shorter  than  for  a  longer  distance  as  between  N 
shipments  of  the  same  kind  over  the  same  road  and  going  in  the  same/7 
direction. 

No  question  connected  with  the  problem  of  railroad  regulation  has 
given  the  committee  more  perplexity  than  that  'relating  to  the  utility 
and  expediency  of  legislation  prohibiting  a  carrier  from  charging  more 
for  a  shorter  than  for  a  longer  haul  under  any  circumstances,  not  that 
we  have  any  doubt  as  to  the  injustice  of  such  a  charge  under  most  cir- 
cumstances, but  because  it  seems  inexpedient  to  enforce  such  a  regula- 
tion under  all  circumstances. 

Palpable  discriminations,  peculiar  to  no  State  or  locality,  but  too 
common,  apparently,  to  all,  would  seem  to  be  remedied  by  such  a  pro- 
vision. It  is  asked  for  and  urged  to  preclude  the  carriers  from  reim- 
bursing out  of  local  rates  and  shippers  what  they  lose  by  reckless  and 
needless  competition  upon  through  rates.  It  is  too  plain  to  be  made 
plainer  by  argument  that,  within  certain  limits  and  under  certain  oft- 
occurring  conditions,  the  provision  would  be  a  useful  and  fair  one. 

It  does  not  seem  as  if  there  could  be  any  justification  for  charging 
one  shipper  more  for  hauling  a  car  of  grain  50  miles  than  he  or  another 
is  at  the  same  time  charged  for  hauling  another  car  of  grain  100  miles 
over  the  same  road  and  in  the  same  direction.  The  unfairness  of  the 
greater  charge  for  a  shorter  distance  is  apparent,  and  yet  when  careful 
consideration  is  given  to  such  instances  and  illustrations  as  have  been 
cited  to  the  committee  it  is  difficult  to  avoid  the  conclusion  that,  while? 
the  principal  that  no  greater  charge  should  be  made  for  a  shorter  thar 
for  a  longer  distance  is  just  and  right,  exceptions  to  the  general  rule* 
may  sometimes  be  warranted,  even  in  the  caseof  individual  roads.  And 
when  the  effect  of  the  proposed  prohibition  is  considered  with  reference 
to  the  whole  internal  commerce  of  the  CTnited  States,  and  especially  with 
reference  to  thr  necessity  of  preserving  the  prevailing  cheap  rates  for 
long-distance  transportation,  there  is  reason  to  fear  that  the  result  of 
rigidly  enforcing  the  proposed  regulation  would  be  to  stifle  competition 
in  numberless  cases  where  it  now  exists  and  is  to  the  general  public 
interest,  and  perhaps  to  deprive  the  country  of  the  benefits  of  the  low 
through  rates  now  and  for  years  given  to  and  from  the  tide- water,  with- 
out practical  or  appreciable  advantage  to  intervening  points. 

The  purpose  to  be  accomplished  by  prohibiting  greater  charges 
shorter  than  for  longer  hauls  is  to  equalize  the  existing  differences  be- 
tween  through  and  local  rates.     It  is  intended  for  the  protection  of 
those  most  in  need  of  protection,  the  shippers  at  iuteiior  nou-competi> 
tive  points,  and  to  prevent  corporate  carriers  from  charging  such  ship- 
pers unreasonable  rates  in  order  to  recoup  the  losses  sustained  in  reck- 
less rate  wars  and  by  carrying  through  freights  at  less  than  cost. 

The  accomplishment  of  the  purpose  aimed  at  is  a  "consummation  most 
devoutly  to  be  wished,"  and  the  necessity  of  leuiedying  the  discrimina- 
tions complained  of  is  apparent.  The  real  question  to  be  considered  is, 
therefore,  whether  an  absolute  prohibition  of  a  greater  charge  for  a 
shorter  than  for  a  longer  distance  would  accomplish  the  result  desired 
by  those  who  favor  .such  legislation. 

One  phase  of  this  vexed  question  is  admirably  illustrated  by  the 
statement  of  Mr.  George  W.  Parker,  the  general  manager  of  the  Cairo 


196  INTERSTATE    COMMERCE. 

Short  Line.  (Testimony,  p.  90G.)  The  road  connects  Saint  Louis  and 
Cairo,  and  is  paralleled  on  one  side  by  the  Saint  Louis  and  Cairo 
Kailroad  and  the  Mississippi  Eiver  and  on  the  other  side  by  the  Louis- 
ville and  Nashville  Railroad'.  The  situation  of  this  railroad  is,  in  some 
respects,  peculiar,  and  yet  all  others  are  more  or  less  affected  by  similar 
competitive  conditions  and  influenced  by  the  same  considerations. 

Mr.  Parker  called  attention  to  the  decided  distinction  between  local 
and  through  rates,  and  the  fact  that  different  considerations  affect  their 
determination,  and  said : 

One  is  a  home  question.  It  is  a  matter  between  the  railroad  and  its  patrons  living 
upon  its  line,  the  men  upon  whom  it  depends  for  its  regular  truffle  and  regular  in- 
come— its  bread  and  butter,  so  to  speak.  The  other  is  largely  a  territorial  question, 
and  is  a  strife,  not  so  much  bet  ween  railroads  as  between  trade  centers — common  points. 
The  railroads  are  used,  not  so  much  to  make  profit  for  themselves  in  that  case,  as  they 
are  used  as  sinews  of  war  by  the  trade  centers  upon  which  they  depend  for  business, 
and  where  they  terminate.  So  that  any  comparison  between  through  and  local  rates 
cannot  be  intelligently  made,  unless  you  bear  in  mind  this  distinction  and  these  dif- 
ferent incentives  and  necessities  that  create  the  one  and  the  other.  One  is  based  on 
cost  of  service  ;  the  other  on  the  necessity  of  the  case  regardless  of  expense. 

Referring  to  the  fact  that  his  railroad  was  in  direct  competition  with 
the  .river  substantially  all  the  time,  that  it  was  built  primarily  to 
accommodate  the  local  territory  through  which  it  runs,  and  that  it  was 
dependent  mainly  upon  its  local  patrons  for  its  support,  Mr.  Parker 
said : 

About  33$  per  cent,  of  the  operating  expenses  of  this  road  is  continuous,  regardless 
of  whether  the  road  is  earning  much  or  little,  and  it  therefore  requires  a  certain  vol- 
ume of  business  to  meet  these  fixed  expenses.  In  most  cases,  and  especially  in  some 
seasons  of  the  year,  the  local  business  of  the  road  of  itself  is  not  of  sufficient  volume 
to  make  up  paying  trains,  nor  is  it  sufficient  to  make  the  earnings  over  and  above 
current  expenses  sufficient  to  meet  the  fixed  charges  against  the  road.  So  that  in 
order  to  run  paying  trains  we  generally,  after  we  have  built  the  road  to  accommodate 
the  local  territory,  endeavor  to  get  a  connection  for  through  business  to  be  superadded 
to  the  local  business.  Then  when  we  make  up  a  train  of  ton  or  fifteen  cars  of  local 
freight  to  go  over  our  line  from  Saint  Louis,  we  can  attach  fifteen  or  twenty  cars  more  of 
strictly  through  business.  We  can  take  the  latter  at  a  very  low  rate  rather  than  go 
without  it.  We  are  justified  in  doing  so,  as  one  does  no  prejudice  to  the  other.  We 
would  thereby  have  a  good  paying  train.  Yet  half  of  it  would  be  made  up  of  very 
low-grade  freight,  taken  at  a  low  rate.  The  road  would  be  justified  in  taking  it,  for 
the  reason  that  it  would  cost  very  little  more  to  perform  the  service,  and  it  would 
operate  no  injustice  to  the  local  patrons  of  the  road  who  were  paying  a  higher  rate 
N  on  the  local  freight.  This  would  only  apply  to  competitive  freight. 

Being  asked  what  would  be  the  effect  upon  the  local  charges  of  the 
road  if  it  was  prohibited  from  taking  such  through  freight  at  relatively 
lower  rates,  Mr.  Parker  replied  that  it  would  be  necessary  to  increase 
the  local  rates,  because  it  was  simply  a  question  of  aggregate  earnings, 
and  if  they  could  not  earn  enough  from  one  source  to  float  the  company 
they  must  from  another.  In  this  connection  he  said: 

If  you  limit  its  earning  resources  to  a  small  volume  of  business,  that  small  volume 
of  business  must  pay  a  correspondingly  larger  rate.  Therefore,  whilst  there  is  quite 
a  difference  between  local  and  through  rates,  both  are  benefited,  in  that  the  roads,  by 
taking  through  business  at  low  rates,  are  thereby  enabled  to  make  up  good  paying 
trains,  and  are  by  force  of  circumstances  and  the  drift  of  events  in  the  management 
of  a  road  influenced  to  reduce  their  local  rates,  so  as  to  make  their  earnings  as  a  whole 
correspond  somewhat  to  their  financial  necessities.  Many  branches  of  hwal  business 
require  and  receive  as  low  rates  as  through  business. 


f 


INTERSTATE    COMMERCE.  197 

Another  illustration  of  the  relation  between  through  and  local  rates 
\vas  furnished  by  Mr.  H.  S.  Haiues  in  his  statement  (Appendix,  p.  130), 
as  follows: 

Railroads  are  built  to  accommodate  communities  depemleut  for  transportation  upon 
water-courses,  turnpikes,  or  public  roads.  They  luruisli  cheaper  and  more,  conven- 
ient facilities  than  such  communities  before  possessed,  but  still  it  costs  something  to 
maintain  and  operate  them.  If  no  charge  was  made  for  using  thorn  this  cost  would 
have  to  be  met  by  taxation.  But  whether  met  by  taxation  or  by  charging  freight 
and  passenger  rates,  it  is  a  tax  at.  least  upon  the  communities  which  have  no  other 
mad  to  market.  If  it  costs  $600,000  per  annum  to  keep  up  a  road,  then  the  money 
must  come  out  of  the,  freight  and  passengers  that  are  obliged  to  pass  over  it.  Whether 
(lie  amount  of  business  be  >mall  or  large,  the  money  to  keep  up  the  road  must  be 
forthcoming,  or  it  will  go  to  decay.  It'  lUO.Oi'O  bales  of  cotton  were  the  only  freight 
that  paused  over  a  road  which  carried  no  passengers,  that  cotton  would  have  to  pay 
a  freight  of  *ti  per  bale  if  it  cost  s(jilO,'JOU  per  annum  to  maintain  the  road,  and  no 
legislation  could  make  it  otherwise.  But  if  the  quantity  of  cotton  to  be  transported 
could  be  increased  to  -Ji Ki.OOO  bales,  then  the  cost  of  transportation  could  be  fixed  at 
>.'.  per  bale,  to  the  great  joy  and  relief  of  the  shippers  of  the  first  100,000  bales;  and 
yet  the  $600,000  required  to  operate  the  road  would  bo  forthcoming. 

Now,  suppose  that  the  community  which  raised  this  second  100,000  bales  had  a  water 
route  to  market  and  said  to  the  railroad  company,  ''It  only  costs  a  dollar  per  bale  to 
ship  our  cotton  by  water,  but  we  prefer  to  ship  it  by  rail  at  the  same  price,"  who 
would  be  benelited  if  the  company  took  the  cotton  at  a  doliar  per  bale?  Who  but 
the  local  shippers  themselves,  for  without  this  addition  to  the  business  of  the  road 
they  would  have  to  pay  §600,000  per  year,  or  $6  per  bale,  to  keep  up  the  road,  while 
with  the  $100,000  obtained  from  the  other  100,000  bales  of  competitive  or  through 
cotton  they  would  have  to  pay  but  $500,000  or  $5  per  bale  on  their  own  cotton. 
Should  they  turn  around  upon  the  managers  of  the  railroad  and  say  that  it  was  unjust 
to  the  local  shippers  to  charge  only  a  dollar  per  bale  on  the  through  cotton?  No,  it 
is  not  only  just,  but  to  the  benefit  of  the  local  shippers,  that  the  railroad  which  they 
ate  obliged  to  use  should  get  all  the  business  it  can  from  those  who  are  not  obliged 
to  use  it,  and  at  any  rate  the  latter  choose  to  pay,  provided,  and  it  is  a  very  import- 
ant provision,  that  such  competitive  business  adds  something  to  the  net  revenue  of 
the  road ;  or,  in  other  words,  if  it  be  carried  at  anything  above  the  actual  cost  of 
transportation. 

These  illustrations  make  manifest  the  difficulty  and  danger  of  framing 
a  law  rigidly  regulating  the  rights  and  duties  of  the  corporate  carriers 
engaged  ill  the  business  of  inter-state  commerce  which  shall  efficiently 
guard  against  the  evils  of  which  the  people  complain,  and  at  the  same 
time  certainly  possess  the  elasticity  requisite  by  reason  of  the  varying 
circumstances  and  elements,  almost  without  limit,  which  enter  into  the 
business. 

The  committee  is  convinced  of  the  necessity  of  some  legislation  upon 
tin-  subject  of  long  and  short  hauls.  Many  arguments  of  apparent 
strength  are  urged  against  such  regulations  by  those  who  have  given 
the  question,  the  most  thoughtful  consideration,  but,  after  all,  the  con- 
tentions for  and  against  the  proposition  rest  on  theory,  and  so  must  rest 
until  tested  by  experience.  Such  legislation  must  of  necessity  be 
largely  experimental,  and  its  effects  cannot  be  accurately  determined  in 
advance. 

To  guard  against  the  dangers  apprehended  and  predicted  in  case 
such  legislation  should  be  enacted,  the  committee  has  deemed  it  wise  to 
propose  that  a  greater  charge  for  a  shorter  than  a  longer  haul  shall  be 
declared  presumptive  evidence  of  an  unjust  discrimination,  and  that 
such  charges  shall  be  prohibited  whenever  they  shall  constitute  an  un- 
just discrimination.  This,  we  believe,  will  place  the  determination  of 
the  relative  difference  between  local  and  through  rates  upon  a  just  and 


198  INTERSTATE    COMMERCE. 

equitable  basis,  because  in  such  determination  the  ical  question  to  be 
decided  is  not  so  much  whether  the  through  rates  are  too  low  as  whether 
the  local  points  are  unjustly  discriminated  against.  It  is  also  proposed 
to  place  the  burden  of  proof  upon  the  railroads,  where  it  properly  be- 
longs, and  to  compel  them  to  justify  any  violation  of  the  general  prin- 
ciple that  no  greater  charge  should  be  made  fora  shorter  than  fora 
longer  haul 

A  large  majority  of  the  witnesses  examined  by  the  committee  have 
urged  the  incorporation  in  the  bill  of  a  provision  as  t  j  long  and  short 
hauls.  We  are  satisfied  that  the  sentiment  of  the  country  demands 
some  regulation  upon  this  subject,  and  \Tith  the  safeguards  provided  in 
the  bill  herewith  reported  we  recommend  the  enactment  of  the  legisla- 
tion proposed,  well  knowing  that  if,  upon  fair  trial,  the  provision  shall 
be  found  unfair  to  the  carrier  or  against  the  true  interests  of  the  ship- 
per, the  people  will,  through  appropriate  legislation,  promptly  apply  the 
corrective. 

PUBLICITY  THE  BEST  REMEDY  FOR  UNJUST  DISCRIMINA- 
TION—THE POSTING  OP  RATES  UNDER  THE  DIRECTION 
OF  A  COMMISSION  RECOMMENDED. 

In  the  judgment  of  the  committee  one  of  the  chief  purposes  of  any 
legislation  for  the  regulation  of  inter-State  commerce  should  be  to  se- 
cure the  fullest  publicity,  both  as  to  the  charges  made  by  common  car- 
riers and  as  to  the  manner  in  which  their  business  is  conducted. 

The  business  of  a  common  carrier  concerns  practically  the  whole 
public,  and  the  carrier  exercises  in  some  respects  a  public  function. 
The  people  rightly  feel  that  its  charges  should  be  public  and  open  to  all 
alike,  and  that  they  should  be  fully  informed  as  to  its  financial  condi- 
tion, its  methods  oi' operation,  and  the  net  results  of  its  buisness,  to  the 
end  that  an  intelligent  judgment  may  be  formed  as  to  whether  the 
charges  made,  which  are  in  the  nature  of  a  tax  upon  commerce  and  in- 
dustry, are  reasonable  and  equitably  adjusted.  They  rightfully  de- 
mand the  opportunity  to  procure  this  information,  and  it  is  believed 
that  the  methods  of  regulation  suggested  by  the  committee  in  the 
accompanying  bill  will  provide  the  means  by  which  such  information 
can  best  and  most  readily  be  obtained. 

It  is  agreed  by  all  who  have  given  the  subject  of  railroad  regulation 
attention  that  the  maintenance  of  stable  and  reasonably  uniform  rates 
is  of  the  first  importance  and  greatly  to  be  desired.  Neither  result,  it 
is  also  agreed,  can  be  secured  without  publicity,  which  is  the  surest 
and  most  effective  preventive  of  unjust  discrimination.  Whenever 
rates  are  fluctuating  and  not  alike  to  all,  ic  is  the  rule  that  some  por- 
tions of  the  commercial  community  obtain  secret  advantages  over  the 
remainder.  When  unjust  discrimination  is  practiced  by  the  carrier, 
success  in  business  depends  more  upon  favoritism  (if  nothing  worse) 
than  upon  intelligence,  integrity,  and  enterprise.  The  effect  is  de- 
moralizing in  the  extreme.  Business  is  conducted  upon  a  false  basis, 
false  standards  of  commercial  honor  are  erected,  and  a  premium  is 
offered  to  corruption.  Worst  of  all,  the  advantages  of  unjust  discrimi- 
nation are,  as  a  rule,  enjoyed  by  those  who  least  need  outside  aid,  and 
the  inevitable  effect  of  this  indet'ensible  practice  is  to  build  up  the  larger 
dealer  and  crush  out  the  smaller,  to  foster  monopoly,  and,  in  short,  to 
encourage  the  existing  tendency,  already  too  strong,  towards  the  con- 
centration of  capital  and  the  control  of  commerce  in  the  hands  of  the 
few. 


INTERSTATE    COMMERCE.  190 

CASES   THAT   PUBLICITY   WOULD   UNCOVER. 

The  desirability  of  publicity  as  a  safeguard  against  unjust  discrimi- 
nation is  generally  conceded,  but  the  committee  cannot  refrain  from 
illustrating  its  necessity  by  alluding  to  an  instance  which  has  recently 
attracted  its  attention. 

It  is  well  understood  in  commercial  circles  that  the  Standard  Oil 
Company  brooks  no  competition;  that  its  settled  policy  and  firm  deter- 
mination is  to  crush  out  all  who  may  be  rash  enough  to  enter  the  field 
against  it;  that  it  hesitates  at  nothing  in  the  accomplishment  of  this 
purpose,  in  which  it  has  been  remarkably  successful,  and  that  it  fitly 
represents  the  acme  and  perfection  of  corporate  greed  in  its  fullest 
development.  A  recent  public  exposition  of  its  methods  comes  from 
Ohio,  where  the  corporation  operates  the  Macksburg  Pipe  Line,  which 
carries  oil  to  the  Cleveland  and  Marietta  Kailroad.  This  road  is  in  the 
hands  of  a  receiver  appointed  by  the  United  States  circuit  court.  Com- 
plaint having  been  made  to  Judge  Baxter  of  that  court,  he  investigated 
the  rates  charged  for  the  transportation  of  oil  by  the  receiver,  which 
resulted  in  his  prompt  removal  by  the  court.  It  was  found  that,  while 
the  receiver  was  charging  all  independent  shippers  35  cents  per  barrel, 
the  rate  to  the  pipe  line  in  question  was  but  10  cents  per  barrel.  It  ap- 
peared that  the  Standard  Oil  Company  owned  the  pipes  through  which 
oil  is  conveyed  to  the  road  from  wells  owned  by  individuals,  with  the 
exception  of  certain  pipes  owned  and  used  by  George  liice  and  carrying 
oil  from  his  wells.  To  get  rid  of  this  com  petition  the  assistance  of  the 
receiver  was  sought  and  obtained.  The  company  offered  to  give  the 
railroad  $3,000  worth  of  business  each  month,  while  Kice  could  give  but 
$300  worth.  If  its  demands  were  not  complied  with  it  threatened  to 
extend  its  pipe  line  from  Macksburg  to  the  river  at  Marietta.  What 
those  demands  were  was  stated  as  follows  in  a  letter  h'led  \)y  the  receiver 
as  part  of  his  defense: 

The  Standard  Oil  Company  threatens  ti>  store  and  afterward  pipe  all  oils  under 
its  control  unless  you  make,  the  following  arrangements,  viz:  You  shall  make  a  uni- 
form rait-  of  Hf>  cents  per  barrel  for  all  persons  excepting  the  Standard  Oil  Company; 
yon  shall  charge  them  10  cents  per  barrel  for  their  oil,  and  also  pay  them  25  cents  per 
barrel  out  of  the  ^5  cents  collected  of  other  shippers. 

No  comment  is  needed  upon  this  most  impudent  and  outrageous 
proposition.  If  matters  have  reached  such  a  pass  that  this  enormously 
wealthy  corporation,  not  content  with  the  advantage  of  paying  less  than 
30  per  cent,  of  the  rates  charged  its  occasional  competitors,  is  in.  a  posi- 
tion to  demand  of  a  railroad  which  may  desire  the  privilege  of  carry- 
ing oil  for  others  70  per  cent,  of  the  revenue  received  in  that  way,  the 
least  that  Congress  can  do  is  lo  insist  upon  publicity  or  rates,  and  make 
effective  provision  for  letting  in  the  full  light  of  day  upon  arrangements 
of  this  character. 

No  reason  has  appeared  why  the  fullest  publicity  as  to  the  methods 
of  management  and  the  financial  operations  of  inter-State  carriers  can- 
not properly  and  successfully  be  obtained  by  the  appointment  of  a  na- 
tional railroad  commission  empowered  to  thoroughly  investigate  all 
such  matters,  but  difficulties  have  been  suggested  which  have  seemed 
to  render  impracticable  a  full  compliance  with  an  enactment  requiring 
railroad  companies  to  publish  all  their  rates  and  maintain  them  during 
iixed  periods. 

A  large  majority  of  the  witnesses  examined  by  the  committee  have 
advocated  publicity  of  rates,  but  they  have  not  agreed  iu  recommend- 


200  INTERSTATE    COMMEKCE. 

ing  tliat  changes  without  notice  sliould  he  prohibited.  Even  Mr.  G'Dou- 
uell,  the  chosen  representative  of  the  New  York  Hoard  of  Trade  and 
Transportation  and  the  An ti- Monopoly  League,  upon  the  New  York 
railroad  commission,  who  may*  fairly  be  considered  as  radical  on  the 
subject  of  railroad  regulation,  hesitated  to  say  that  changes  without  no- 
tice should  be  prohibited.  Upon  this  question  Mr.  O'Dounell  said: 

The  publication  of  rates  has  been  «;  succesn  in  England  and  on  the  Continent.  It 
is  yet  to  be  tested  with  the  Yankee  vra/  of  doing  business.  Along  a  line  of  country 
that  has  rival  routes,  I  am  not  prepared  i/>  say  whether  a  prohibition  of  changes  of 
rates  without  public  notice  will  benefit  tht,  shipper  or  result  in  combinations  that 
will  hurt  him. 

WHAT  THE   POSTING   OF   RATES  WOULD  MEAN. 

The  posting  or  publication  of  railroad  rates  would  be  of  no  advantage 
to  the  public  unless  the  law  contemplates  and  requires  that  the  sched- 
ules established  and  posted  are  to  be  strictly  adhered  to.  If  variations 
from  the  published  rates  are  to  be  permitted,  it  would  be  useless  to 
have  them  posted.  So  far  as  thai  is  concerned,  information  as  to  the 
established  or  ostensible  rates  is  now  sufficiently  accessible  to  the  public, 
and  posting  them  would  only  impose  a  needless  annoyance  and  useless 
expense  upon  the  corporations. 

The  posting  or  publication  of  rates,  to  be  a  preventive  of  unjust  dis- 
crimination, must  mean  that  the  railroads  shall  be  operated  under  a 
system  of  fixed  rates,  established  by  themselves,  but  just  as  inflexible 
as  if  the  rate  upon  each  article  of  shipment,  for  given  distances  or  be- 
tween places  named,  should  be  prescribed  by  statute  (not  the  maximum 
or  minimum,  but  the  exact  rate  to  be  charged),  and  any  deviation  there 
from  should  be  declared  unlawful,  except  when  the  schedule  is  changed 
in  such  manner  as  maybe  provided.  A  compliance  with  such  a  require- 
ment, it  is  plain,  would  occasion  a  complete  revolution  in  existing 
methods  of  business  and  of  railroad  management.  A  change  as  great 
as  this  would  be — one  making  necessary  almost  a  complete  readjustment 
of  the  commercial  relations  of  the  railroad  to  the  community — cannot 
be  effected  easily  or  without  friction  and  opposition.  The  latter  must 
be  expected  whenever  it  is  undertaken,  but  the  revolution  to  be  accom- 
plished would  be  of  incalculable  advantage  to  the  public,  and  cannot  be 
brought  about  any  too  soon.  Publicity  of  rates  is  insisted  upon  and 
practically  secured  in  other  countries,  and  there  can  be  no  doubt  that 
it  should  obtain  in  the  United  States. 

THE   QUESTION  OF  POOLING. 

In  view,  however,  of  the  active  competition  which  exists  at  the  great 
commercial  centers,  the  successful  enforcement  of  legislation  requiring 
the  operation  of  the  entire  transportation  system  upon  a  basis  of  fixed 
rates  would  seem  to  depend  upon  a  general  predetermination  of  the 
rates  to  be  established  by  the  carriers  interested.  It  seems  necessary, 
therefore,  to  leave  a  way  open  by  which  such  agreements  can  be  made, 
in  order  to  avoid  the  constant  friction  that  would  otherwise  be  occa- 
sioned. 

If  competition  is  to  have  full  sway,  as  it  does  now,  the  constant 
changes  it  would  necessitate  would  render  it  impossible  to  maintain 
fixed  rates,  just  as  it  is  now.     It  should  be  understood,  therefore,  that 
a  statute  requiring  the  posting  of  rates  and  prohibiting  changes  with 
put  notice  must  of  necessity  operate  in  restraint  of  competition  if  en- 


INTERSTATE    COMMERCE.  201 

forced.  It  would  not  destroy  the  benefits  of  legitimate  competition, 
but  it  would  place  a  wholesome  restraint  upon  reckless  competition, 
and  in  that  way  lessen  unjust  discrimination,  which  is  developed  in  its 
most  objectionable  forms  under  the  nourishing  influence  of  unrestricted 
competition. 

For  these  reasons  the  committee  does  not  deem  it  prudent  to  recom- 
mend the  prohibition  of  pooling,  which  has  been  urged  by  many  ship- 
pers, or  the  legalization  of  pooling  compacts,  as  has  been  suggested  by 
many  railroad  officials  and  by  others  who  have  studied  the  question. 

The  prohibition  of  pooling  is  asked  only  to  prevent  the  evils  incident 
to  the  operation  of  the  system  as  it  has  been  conducted,  and  to  avert  the 
political  dangers  apprehended  from  combinations  of  aggregate  corpo- 
rate power  Its  legalization  is  asked  because  pooling  has  thus  far  failed 
to  accomplish  its  purpose  by  reason  of  the  impossibility  of  enforcing 
lli<-  compacts  made.  The  ostensible  object  of  pooling  is  in  harmony 
with  the  spirit  of  regulative  legislation,  but  it  is  admitted  that  it  has 
failed  to  accomplish  its  avowed  purpose. 

The  effect  of  pooling  under  a  wise  system  of  regulation  cannot,  per- 
haps, be  fairly  judged  by  its  operation  in  the  past  under  entire  freedom 
from  legislative  restrictions,  nor  can  it  be  safely  assumed  that  it  would 
be  subject  to  the  same  objections  and  give  rise  to  the  same  complaints 
under  legislative  regulation  as  it  has  under  the  conditions  which  have 
heretofore  governed  its  operation. 

It  is  believed  that  the  evils  which  have  been  complained  of  can  be 
largely  remedied  under  the  method  of  regulation  proposed  in  the  bill 
herewith  reported.  If  this  should  prove  to  be  the  ease,  the  prohibition 
of  pooling  is  unnecessary.  If  it  should  not,  this  defect  in  the  system 
of  regulation  can  readily  be  corrected  by  additional  legislation. 

But,  in  any  event,  the  evils  to  be  attributed  to  pooling  are  not  those 
which  most  need  correction,  and,  if  agreements  between  carriers  should 
prove  necessary  to  the  success  of  a  system  of  established  and  public 
rates,  it  would  seem  wiser  to  permit  such  agreements  rather  than  by 
prohibiting  them  to  render  the  enforcement  and  maintenance  of  agreed 
rates  impracticable.  The  majority  of  the  committee  are  not  disposed  to 
endanger  the  success  of  the  methods  of  regulation  proposed  for  the  pre- 
vention of  unjust  discrimination  by  recommending  the  prohibition  of 
pooling,  but  prefer  to  leave  that  subject  for  investigation  by  a  commis- 
sion when  the  effects  of  the  legislation  herein  suggested  shall  have  been 
developed  and  made  apparent. 

THE  PROHIBITION   OF   CHANGES   WITHOUT  NOTICE. 

The  practical  effect  of  a  requirement  that  rates  should  be  posted  and 
not  changed  without  notice  would  be  the  same  as  if  the  statute  de- 
clared that  the  existing  tariffs  should  be  considered  as  showing  both 
the  maximum  and  minimum  rate  at  the  same  time  ;  in  other  words,  the 
actual  charging  rate.  All  railroads  now  make  and  print  such  tariffs 
for  the  guidance  of  their  agents  and  the  information  of  the  public,  but 
they  are  not  intended  to  cover  all  shipments,  and  are  varied  as  the  exi- 
gencies of  business  or  competition  may  require.  It  would  not  be  to  the 
general  interest  to  have  railroad  rates  made  so  inflexible  that  they 
could  not  be  varied  under  any  circumstances,  except  at  long  intervals, 
and  the  question  of  determining  how  changes  may  be  permitted  when 
necessary  without  losing  the  advantages  of  posting  has  been  found  a 
.troublesome  one. 


202  INTERSTATE    COMMERCE. 

Some  have  urged  that  changes  should  only  be  allowed  upon  the  sub- 
stitution and  posting  of  a  new  schedule  five,  ten,  twenty,  or  thirty  days 
before  it  should  take  effect.  Others  have  suggested  that  rates  should 
not  be  raised  without  notice,  but  might  be  reduced  at  discretion,  oil  the 
ground  that  notice  of  a  proposed  reduction  would  stop  all  shipments 
until  the  reduced  rates  went  into  effect,  and  this  consideration  is  not 
without  force. 

It  really  matters  very  little  how  many  days'  notice  may  be  required, 
except  that  it  should  be  long  enough  to  answer  its  purpose,  and  short 
enough  to  give  some  flexibility  to  the  tariff.  In  the  ordinary  course  of 
business  it  would  require  at  least  one  or  two  days  to  post  schedules  at 
all  the  stations  on  an  inter-State  road,  after  they  had  been  arranged 
and  printed,  so  that  the  requirement  of  a  few  days'  notice,  added  to 
the  time  needed  for  making  the  change,  practically  amounts  to  a  pro- 
hibition of  changes  at  pleasure,  and  makes  rates  open  to  all  instead  of 
only  to  a  favored  few,  which  is  the  end  desired.  It  is  believed  that  the 
time  suggested  in  the  accompanying  bill  would  be  reasonable  and  suf- 
ficient notice  and  not  unduly  oppressive. 

DIFFICULTIES  IN  THE  WAY  OF  ENFORCING  PUBLICITY. 

On  the  part  of  the  railroad  authorities  the  advantages  of  publicity 
have  been  freely  admitted  even  by  those  who  have  suggested  difficulties 
which  they  believed  made  it  impracticable  to  secure  it.  Their  position 
is  illustrated  by  the  following  extracts  from  the  examination  of  Mr.  Fink: 

The  CHAIRMAN.  Would  you  or  not  by  law  say  unequivocally  that  every  railroad 
should  publish  a  tariff  of  rates? 

Mr.  FINK.  It.  is  not  always  possible  for  the  railroads  to  publish  tariffs  upon  all  their 
traffic,  but  ihcy  can  do  so  upon  the  large  bulk  of  it,  especially  upon  the  great  inter- 
State  traffic.  They  are  actually  doing  this  to-day,  and  they  can  continue  to  do  so. 
But  there  are  some  cases,  for  example,  when  railroads  directly  compete  with  water- 
transportation  lines,  where  it  would  not  be  just  to  compel  them  to  publish  their  tariffs 
unless  the  competing  water  line  is  compelled  also  to  do  so.  This  is  hardly  practicable, 
or  if  practicable,  might  not  be  desirable.  Therefore,  a  certain  discretion  must  be 
exorcised,  and  it  would  not  be  just  to  pass  a  law  unequivocally  to  publish  their  tariffs. 
The  experience  and  practice  of  the  past  would,  however,  form  a  guide  showing  where 
it  Is  practicable  and  where  it  is  not.  I  think  this  question  would  regulate  itself  by 
the  competition  between  the  railroads.  For  example,  the  existing  organizations  pub- 
lished tariffs  covering  a  very  large  part  of  the  inter-State  traffic,  and  they  wouldhave 
to  continue  to  do  so.  It  is  one  of  the  difficulties  of  this  problem  that  you  cannot 
establish  a  fixed  law  covering  the  whole  ground ;  you  unfortunately  meet  with  so 
many  exceptional  cases  in  which  a  general  law  would  work  mischief. 

The  CHAIRMAN.  An  act  of  Congress  could  not  very  well  say  "You  must  publish 
your  tariff  in  agreement  with  other  roads,"  could  it? 

Mr.  FINK.  I  am  inclined  to  think  that  if  the  Government  should  find  it  necessary 
for  the  public  good  it  could  require  all  roads  whose  tariffs  are  interdependent  to  es- 
tablish joint  tariffs.  It  would  not  force  any  road  to  make  any  particular  tariff.  The 
road  that  desires  to  make  the  lowest  tariff  would,  of  course,  regulate  the  other  roads, 
as  is  practically  the  case  now. 

The  CHAIRMAN.  But  Congress  could  not  say  that  every  road  should  publish  its  tariff 
of  freight  and  passenger  charges? 

Mr.  FINK.  Yes ;  I  think  as  a  general  rule,  and  if  such  a  law  was  passed  it  would 
indirectly  force  the  roads  to  agree  upon  tariffs.  (Testimony,  p.  109.) 


INTERSTATE    COMMERCE.  -  203 

Mr.  Fiiik  further  said : 

I  sometimes  despair  that  we  ever  cau  accomplish  anything  by  voluntary  agreement, 
although  this  would  be  the  proper  way  to  do.  If  we  caiiuot,  and  the  Government 
cannot  step  in  and  make  these  necessary  tariff  agreements  binding  in  tin-  same  way 
as  it  enforces  all  other  legitimate  contracts,  then  I  do  not  know  what  is  to  become 
of  the  railroads  of  this  country.  I  am  just  as  anxious  to  formulate  a  law  that  would 
reach  the  evil  as  you  are;  but  at  the  same  time  I  cannot  see  my  way  clear  to  any  law 
that  would  be  effective  and  operate  justly  to  all  interests.  I  can  see  my  way  clear 
this  far:  that  when  railroad  companies  do  come  together  and  publish  a  tariff,  they 
ought  to  he  made  to  adhere  to  it ;  but  the  question  is  how  to  get  them  together  if  one 
or  the  other  wishes  to  stay  out.  I  do  not  exactly  know  how  that  can  be  done,  but  I 
would  recommend  that  if  any  legislation  is  to  be  had  at  all  this  experiment  should  be 
tried  of  forcing  roads  to  publish  and  maintain  tariffs.  *  *  * 

Now,  if  that  outside  road  were  also  obliged  to  publish  its  tariff  and  to  adhere  to  it 
under  the  Government  law,  as  the  associated  roads  would  be,  then  it  would  have  110 
advantages,  and  this  would  induce  it  to  join  the  other  roads  and  agree  upon  a  tariff',  so 
that  a  law  requiring  all  roads  to  publish  tariffs  might  have  the  desired  effect  of  bring- 
ing about  an  agreement  between  all  the  roads,  and  thus  secure  the  maintenance  of 
tariffs.  I  am,  therefore,  in  favor  of  forcing  railroads  that  hold  themselves  out  as 
public  inter-State  carriers  to  publish  and  strictly  maintain  their  tariffs.  At  the  same 
time  I  see  a  great  many  difficulties  in  the  way  of  enforcing  such  a  general  law.  Con- 
gress has  no  control  over  the  tariffs  of  roads  that  are  exclusively  located  in  one  State. 
I  will  refer  for  illustration  to  the  effect  of  such  a  law  upon  the  relations  between  the 
New  York  Central  and  Erie  Railroads.  The  former  is  located  in  one  State  and  not 
subject  to  Congressional  law,  while  the  latter  passes  through  several  States  and  is 
subject  to  Congressional  legislation.  We  will  suppose  a  tariff  was  agreed  upon  be- 
tween New  York  and  Chicago,  and  published  as  the  official  tariff'  of  all  roads.  The 
New  York  Central  could  readily  evade  the  law  by  making  a  lower  rate  between  New 
York  and  Buffalo  by  which  the  established  and  published  through  rate  could  be  re- 
duced without  violating  the  law  of  Congress,  and  it  could  take  all  the  business  away 
from  the  Erie  Railroad,  which  is  obliged  to  adhere  to  the  published  tariff.  The  diffi- 
culty is  that  you  cannot  control  the  tariff  on  the  railroads  that  are  located  in  one 
State.  And  yet  these  roads  are  potent  factors  in  the  establishment  of  proper  tariff's 
on  inter-State  traffic. 

By  refereiice  to  Mr.  Fink's  statement  (Testimony,  p.  112),  bis  expla- 
nation of  the  methods  by  which  the  law  might  be  evaded  under  such 
circumstances  will  be  found.  He  also  suggested  a  difficulty  in  the  case 
of  the  Canadian  roads,  as  follows: 

The  Grand  Trunk  Railroad  is  as  important  a  factor  in  the  maintenance  of  just 
and  reasonable  tariffs  throughout  the  States  as  is  the  New  York  Central  or  the  Penn- 
sylvania Central.  Yet  the  Grand  Trunk  Railroad  is  not  under  your  jurisdiction.  It 
can  make  any  tariff'  it  chooses  between  Chicago  and  Montreal.  The  rates  from  Chi- 
cago to  Montreal  affect  the  rates  to  all  the  seaboard  cities  in  the  United  States.  If 
the  American  roads  are  obliged  to  publish  and  maintain  their  tariffs,  all  that  the 
Grand  Trunk  Railroad  will  have  to  do  is  to  make  a  rate  somewhat  lower  and  secure 
all  (he  business,  or  as  much  of  the  business  as  it  cau  carry,  and  take  it  away  from 
the  American  roads  and  the  American  ports.  How  can  that  difficulty  be  got  overt 

The  CHAIRMAN.  Some  portion  of  the  road  is  in  the  United  States.  Can  you  not- 
reach  the  difficulty  on  that  account? 

Mr.  FIXK.  I  do  not  see  how  you  can  pass  a  law  by  which  you  can  compel  the  Grand 
Trunk  Railroad  to  observe  a  through  rate,  from  Chicago  to  Montreal,  which  is  a  com- 
peting point,  and  affects  the  rates  from  Chicago  to  New  York.  From  Chicago  the 
Graiik  Trunk  runs  to  the  Detroit  River.  It  is  an  American  road,  subject  to  your  laws; 
but  wheu  they  cross  the  Detroit  River  have  you  any  jurisdiction  over  that  portion  of 


204  INTERSTATE    COMMERCE. 

the  road  from  Detroit  River  to  Montreal,  and  can  the  Grand  Trunk  not  make  what- 
ever tarilV  it  pleases?  Under  the  proposed  law  they  would  have  to  publish  a  tariff 
from  Chicago  to  Port  Huron  only.  When  the  road  leaves  this  country  they  may  i-arry 
freight  for  nothing.  Can  you  compel  them  to  observe  the  tariff  in  Canada  ?  They  may 
have  conformed  to  it  in  this  country.  By  this  illustration  you  will  see  how  difficult 
it  is  to  require  the  railroads  in  the  United  States  to  publish  and  maintain  tariffs  when 
foreign  competitors  are  not  subject  to  the  same  laws. 

And  Mr.  George  E.  Blanchard,  referring  to  the  same  difficulty,  said: 

The  Grand  Trunk  Railroad  Company,  operating  mainly  in  and  through  Canada,  has 
access,  under  our  reciprocities,  to  the  territory  of  the  United  States,  where  originates 
and  terminates  a  great  bulk  of  its  through  carrying  traffic.  It  is  built  upon  3^  to  5 
percent,  bonds,  with  cheap  steel  rails,  which  paid  no  import  duties,  and  it  is  being 
operated  by  labor  which  has  not  reached  the  prices  paid  to  our  own.  This  parallel 
foreign  carrier,  if  water  was  not  present,  would  in  itself  regulate  through  American 
railway  charges  to  the  seaboard.  No  legislation  contemplated  or  recommended  by 
your  committee,  and  none  taken  by  the  Senate  or  Government  of  the  United  States, 
can  determine,  alter,  or  regulate  the  rates  of  that  great  railway  in  Canada.  And  that 
I  beg  the  committee  to  remember  as  a  most  important  point  in  its  recommendations 
as  to  railway  legislation.  Mr.  Reagan,  with  whom  I  have  had  repeated  discussions 
on  this  subject,  flips  it  away  as  a  boy  would  toss  a  cent  for  heads  or  tails  on  the  pave- 
ment. But  it  cannot  be  so  dismissed,  or  it  will  always  be  heads  for  Canada.  It  is  a 
factor  that  will  inevitably  affect  to  ruin  the  ultimate  business  competition  with  the 
railways  of  this  country  if  you  surround  our  railroads  with  cast-iron  conditions  of 
legislation  and  let  parallel  foreign  rail  carriers  go  free.  The  Canadian  Pacific  and  the 
Grand  Trunk  and  all  these  lines  can  get  English  capital  for  the  great  improvement  of 
their  systems  under  their  own  management,  regulations,  and  laws  for  3  per  cent.,  if 
their  capital  was  protected  by  a  United  States  law  that  injured  our  own  railways. 
(Testimony,  p.  156.) 

In  the  course  of  his  argument  Mr.  Blauchard  advocated  publicity  of 
rates  in  case  the  Canadian  and  State  roads  could  also  be  controlled. 
The  following  statements  show  his  position : 

Publicity  will  do  very  much  but  not  everything,  and  publicity  is  often  relatively 
harmful.  I  cannot  see,  for  example  (first  taking  a  State  illustration  as  outside  your 
immediate  jurisdiction),  why  one  railway  company  should  publish  the  rates  at  which 
it  carries  the  iron  from  a  furnace  to  a  given  point,  if  its  rival  in  another  State  does 
not  state  its  rates  to  the  same  or  a  rival  point.  It  is  giving  a  weapon  all  the  time  to 
the  company  that  does  not  practice  publicity.  The  same  thing  is  internationally  t  rue 
in  the  Grand  Trunk  illustration  I  have  before  spoken  of.  If,  for  example,  as  is  claimed 
by  Mr.  Reagan,  a  rate  was  published  by  all  the  American  lines  from  Chicago  to  New 
York  to-day,  and  it  could  not  be  changed  for  ten  or  thirty  days  without  public  notice, 
while  the  Grand  Trunk  could  change  its  rates  within  ten  or  thirty  minutes,  it  would 
be  the  easiest  thing  in  the  world  for  the  Canadian  road  to  keep  one  cent  per  100 
pounds  under  the  American  railway  rates,  and  decamp  with  the  controllable  busi- 
ness. This  is  too  plain  a  statement  to  be  questioned. 

Senator  MILLEK.  Let  us  suppose  that  by  a  Federal  law  all  through  rates  were  com- 
pelled to  be  published  and  not  to  be  changed  without  ten  days'  notice.  What  diffi- 
culty would  there  be  in  compelling  any  Canadian  railroad  which  received  freight 
within  our  borders  to  publish  its  rates  and  adhere  to  them  the  same  length  of  time  as 
to  notice? 

Mr.  BLANCHARD.  Nothing,  if  you  can  regulate  the  whole  length  of  its  line,  in  Can- 
ada as  well  as  in  the  Union.  For  example,  if  you  will  compel  the  Grand  Trunk,  un- 
der a  general  law  of  our  National  Legislature,  to  publish  and  adhere  to  its  rates  all 
the  way  through  to  and  via  Montreal,  very  well.  But  if  it  publishes  its  rates  only  to 
Petroit  and  observes  them  to  that  point,  and  then  makes  all  its  changes  and  couces 


INTERSTATE    COMMERCE.  205 

sious  and  inducements,  concealed  or  otherwise,  east  of  Detroit,  on  that  part  of  its 
route  which  is  outside  of  our  natioual  jurisdiction — which  they  certainly  would  do  if 
they  did  any  tortuous  thing — then  you  regulate  only  a  small  piece  of  a  large  line,  and 
the  regulation  would  have  no  more  effect  than  if  you  did  not  regulate  any  part  of  it. 
The  chain  is  no  stronger  than  its  weakest  link. 

Senator  MILLER.  We  could  pass  a  law  which  would  compel  them  to  publish  rates 
for  all  through  freight  received  in  our  territory,  and,  failing  to  carry  that  out,  they 
could  be  stopped. 

Mr.  BLANCHARD.  If  that  cau  be  done  it  ought  to  be  done.     In  other  words,  what- 
ever limitations  are  put,  upon  the  American  railways  clearly  ought  to  be  put  upon  the 
competing  Canadian  rail\va\s,  and  specific  limitations  should  not  be  put  on  one  with 
out  the  other. 

Senator  MILLKR.  Undoubtedly.     It  cannot  be  done  without  it. 

Mr.  BLANCHARD.  No;  it  cannot  lie  justly  done  without  it.  This  being  settled,  the 
question  of  publicity  is,  in  my  judgment,  the  one  in  which  you  will  find  the  princi- 
pal cure  for  the  ills  of  discrimination.  *  *  *  As  to  the  rates  generally  charged  to 
the  public  between  principal  points  on  staple  products,  I  have  often  said  that  they 
ought  to  be  posted  in  every  station,  both  freight  and  passenger,  and  in  every  Gov- 
ernment building  in  the  United  States  at  the  point  at  which  the  railroad  and  traffic 
originate.  There  should  be,  for  example,  in  the  post-office  and  custom-house  of 
Chicago  a  list  of  the  actual  rates  which  the  people  are  to  be  charged  by  rail,  pre- 
cisely as  the  rates  of  postage  are  posted. 

The  CHAIRMAN.  And  not  require  that  at  the  railroad  office  ? 

Mr.  BLANCHARD.  Require  it  at  the  railway  offices  as  well  as  at  such  public  build- 
ings. It  is  a  very  easy  matter  for  each  company  to  have  its  form.  It  now  spends  au 
enormous  sum  of  money  in  passenger  advertising  which  is  of  no  practical  value,  and 
this  would  be  of  more  value  in  every  way  to  them  and  to  the  public.  (Testimony, 
p.  100.) 

A   SYSTEM  OF  LICENSES. 

Patient  consideration  has  been  given  by  the  committee  to  the  serious 
difficulties  which  have  been  met  with.  It  is  apparent  that  great  injus- 
tice would  be  occasioned  by  a  rigid  requirement  as  to  publicity  which 
did  not  apply  alike  to  all  carriers  of  inter-State  freights,  and  especially 
if  great  corporations  like  the  Grand  Trunk  Railroad  and  the  New  York 
Central  Railroad  should  be  able  to  evade  its  provisions  by  reason  of 
the  advantages  of  their  geographical  position. 

The  United  States  Supreme  Court,  in  construing  the  power  of  Con- 
gress to  regulate  commerce,  has  declared,  in  Mobile  vs.  Kimball  (see  p. 
33),  that  "That  power  is  indeed  without  limitation.  It  authorizes  Con- 
gress to  prescribe  the  conditions  upon  which  commerce  in  all  its  forms 
shall  be  conducted  between  our  citizens  and  the  citizens  or  subjects  of 
other  countries,  and  between  the  citizens  of  the  several  States,  and  to 
adopt  measures  to  promote  its  growth  and  insure  its  safety." 

This  is  assuredly  conclusive  as  to  the  authority  of  Congress  to  "pre- 
scribe the  conditions"  upon  which  common  carriers  may  engage  in  inter- 
State  traffic,  and  its  authority  over  foreign  commerce  is  unquestioned. 
The  two  are  so  intimately  intermingled  that  inter-State  commerce  cannot 
be  effectively  regulated  without  also  regulating  to  some  extent  the  trans- 
portation of  foreign  commerce  from  and  to  the  several  States,  and  the 
purpose  of  the  provisions  of  the  accompanying  bill,  which  relates  to 
international  commerce,  is  to  meet  this  exigency. 

It  is  hoped  and  believed  that  these  provisions  will  place  all  carriers 
engaged  in  inter-State  traffic  in  any  way  upon  an  equality;  but  if  they 
should  in  practice  be  found  to  operate  unequally  or  be  ineffective,  the 


206  INTERSTATE    COMMERCE. 

committee  would  suggest  that  the  difficulty  can  be  overcome  by  <l  pre- 
scribing the  conditions"  upon  which  inter-State  ;uid  international  traf- 
fic shall  be  conducted,  and  by  prohibiting  any  carrier  from  engaging 
therein  until  it  has  received  a  license  so  to  do  from  the  national  com- 
inisson,  to  be  renewable  annually,  and  to  be  suspended  or  revoked  for 
violation  of  the  regulations  prescribed, 

ANOTHER   OBJECTION. 

An  objection  frequently  strongly  urged  against  a  statute  requiring 
the  posting  of  rates  and  prohibiting  changes  without  notice  is  that  it 
would  prevent  one  road  from  meeting  cuts  made  by  another,  in  order  to 
protect  its  business.  It  is  argued  that  the  road  which  managed  to  post 
its  rates  last  would  by  making  concessions  have  a  monopoly  for  the  pe- 
riod during  which  they  must  remain  unchanged ;  that  sharp  manage- 
ment to  secure  that  monopoly  would  be  the  most  successful  manage- 
ment; that  a  new  temptation  to  trickery  would  thus  be  introduced, 
and  a  far  more  powerful  one  to  the  cutting  of  rates  than  now  exists, 
because,  if  successful,  extraordinary  advantages  would  be  expected 
from  it.  This  argument  is  plausible  and  staggers  many  who  would 
otherwise  favor  publicity  and  fixed  rates;  but  it  is  easily  answered.  In 
the  first  place,  it  must  be  remembered  that  a  schedule  thus  posted  by 
a  road  desiring  to  cut  rates  would  net  take  effect  at  once,  but  only  after 
the  required  notice.  As  each  railroad  has  its  telegraph  service  and 
agents  at  every  competing  point,  the  others  would  be  immediately  ad- 
vised of  the  proposed  "cut,"  just  as  they  are  now  of  any  similar  move, 
and  could  take  action  at  once.  And  changes  necessary  under  such 
circumstances  could  be  telegraphed  to  each  station,  so  that  new  sched- 
ules could  be  printed  and  posted  not  more  than  one  day  later  perhaps 
than  those  of  the  other  road.  Not  more  than  a  day  or  two  would  nec- 
essarily be  lost  in  this  way,  and  as  the  public  would  be  advised  that 
both  roads  had  made  the  change,  it  is  unreasonable  to  suppose  that  a 
railroad  would  be  placed  at  any  great  disadvantage  in  the  manner  in- 
dicated. On  the  contrary,  they  have  always  been  fuliy  competent  to 
protect  themselves,  and  there  is  no  reason  why  they  should  not  be- 
under  the  proposed  statute.  Each  railroad  knows  far  better  than  the 
public  now  can  what  other  roads  are  doing. 

WHAT  RATES   SHOULD  BE   POSTED? 

Still  another  objection  to  legislation  of  the  character  proposed  has 
been  that,  while  it  would  of  course  be  practicable  for  a  railroad  to  post 
at  every  station  the  rates  to  every  other  station  upon  its  line,  it  cannot 
post  rates  to  points  on  the  line  of  connecting  or  other  roads:  first,  be- 
cause it  does  not  know  what  rates  the  other  road  will  accept,  and,  sec- 
ond, because  it  would  be  difficult  to  find  space  in  an  ordinary  station  in 
which  to  post  the  rates  on  thousands  of  articles  to  hundreds  or  thou- 
sands of  different  places. 

In  the  first  place,  all  that  is  necessary  to  accomplish  the  purpose  de- 
sired is  to  require  the  rates  from  each  station  to  other  stations  to  be 
posted.  This  would  secure  the  publicity  and  permanency  of  all  rates, 
and  the  labor  and  expense  involved  in  the  preparation  of  a  separate 
schedule  for  each  shipping  point  is  all  that  ought  to  be  required.  So 
far  as  the  rates  upon  each  individual  road  go  there  is  nothing  to  pre- 
vent publicity  and  posting,  as  all  railroad  managers  admit. 

When  it  comes  to  the  innumerable,  number  of  through  rates  between 


INTERSTATE    COMMERCE.  207 

points  on  connecting  lines  the  difficulties  are  greater.  These  rates  are 
not  ascertained  by  adding  to  the  local  rate  from  the  point  of  shipment 
to  the  junction  point  the  local  rate  on  the  other  line  from  the  junction  to 
the  place  of  delivery.  On  the  contrary,  the  through  rates  are  usually 
much  less  than  the  sum  of  the  two  local  rates  in  such  a  case.  If  they 
were  not,  there  would  be  very  little  through  business.  No  one  desires  to 
prohibit  through  shipments,  and  these  must  therefore  either  be  excepted 
from  the  provisions  of  the  statute,  or  some  plan  mnst  be  adopted  by 
which  through  rates  can  be  arranged  and  posted.  It  will  not  do  to  ex- 
cept them,  for  the  discriminations  resulting  from  low  through  rates  are 
those  most  complained  of  and  those  it  is  desired  to  prevent.  It  is  evi- 
dent, therefore,  that  the  through  rates  must  be  a  matter  of  bargain  and 
agreement  between  connecting  roads  and  those  funning  links  in  through 
lines.  The  objection  that  one  road  cannot  control  the  rates  of  another, 
and  does  not  know  what  rate  the  other  would  accept,  does  not  seem  to 
the  committee  to  be  a  tenable  one.  The  committee  does  not  see  how 
the  situation  would  be  changed  from  what  it  is  to-day  by  requiring 
through  rates  to  be  posted.  No  railroad  can  now  make  a  through 
rate  over  its  own  and  other  lines  without  an  understanding  or  agree- 
ment with  those  lines  as  to  what  such  rates  shall  be  and  the  propor- 
tions to  which  each  shall  be  entitled.  The  joint  tariffs  of  through  rates 
could  be  arranged  exactly  as  they  are  now  arranged,  by  common  agree- 
ment, and  as  the  law  would  in  effect  prohibit  shipments  being  made 
except  to  points  to  which  rates  were  posted,  if  posting  at  such  points 
was  required,  it  need  not  be  feared  but  that  agreements  and  joint  tariffs 
would  be  made. 

Some  railroad  men  have  insisted  that  an  ordinary  station  would  not 
afford  enough  space  for  the  posting  of  all  rates  by  the  larger  roads,  and 
have  suggested  that  through  rates  should  only  be  posted  to  places  con- 
taining, say,  10,000  inhabitants,  arguing  that,  as  the  rates  to  the  larger 
places  would  be  public,  the  enactments  against  unjust  discrimination 
would  sufficiently  protect  the  smaller  places. 

The  committee  appreciates  the  force  of  the  objection  raised  as  to  the 
multiplicity  of  through  rates  that  must  be  made  to  all  parts  of  the 
United  States  by  any  railroad  having  a  large  general  business,  and  it 
is  not  deemed  practicable  to  put  in  operation  such  a  system  of  fixed 
rates  as  is  proposed  at  all  points  and  upon  all  lines  at  one  and  the  same 
time  by  a  positive  requirement  to  that  effect. 

Any  railroad  is  liable  at  any  time  to  be  called  on  to  accept  shipments 
and  make  rates  from  any  station  upon  its  line  to  any  one  of  twenty 
thousand  other  stations  in  the  United  States,  and  it  is  plain  that  such 
a  positive  requirement  as  that  suggested  could  not  possibly  be  enforced, 
because  it  would  be  a  practical  impossibility.  Such  a  revolution  in  ex- 
isting methods  of  railway  management  as  it  is  desired  and  proposed  to 
bring  about  must  be  proceeded  with  cautiously.  We  do  not  believe 
that  Congress  is  competent  to  designate  the  places  at  which  or  to  which 
rates  should  be  posted,  and  we  therefore  recommend  that  the  proposed 
commission  be  authorized  to  prescribe  the  manner  in  which  and  the 
extent  to  which  rates  should  be  published,  and  thus  provide  for  putting 
the  new  system  of  publicity  into  effect  by  degrees  and  for  gradually 
extending  its  operation,  as  may  be  found  practicable. 

It  is  rarely  the  case  that  any  business  honestly  conducted  can  be  in- 
jured by  having  its  methods  and  operations  made  known  to  the  world. 
Secret  transactions  by  railroad  companies  are  not  necessarily  dishonest, 
but  dishonest  transactions  are  always  secret,  or  intended  to  be.  The 
fact  that  a  rate  is  secret  is prima  facie  evidence  that  il  gives  the  receiver 


208  INTERSTATE    COMMERCE. 

an  undue  advantage  or  injures  his  competitor.  The  experience  of  the 
State  railroad  commissioners  has  demonstrated  the  advantages  of  pub- 
licity in  dealing  with  the  railroads.  As  Mr.  Rogers,  of  the  New  York 
commission,  expressed  it: 

It  appeared  to  be  the  idea  of  railroad  managers  to  operate  their  roads  in  a  myste 
rious  way.    All  sorts  of  secret  compacts  were  made,  and  the  very  fuet  that  there  was 
secrecy  gave  rise  to  the  opinion  that  there  might  bo  some  great  abuse.     That  seen  T\ 
revealed,  and  the  veil  pulled  aside,  a  large  proportion  of  the  grievances,  or  the  sup- 
posed grievances,  disappear  spontaneously. 

While  it  is  impossible  to  foresee  the  exact  effect  of  legislation  requir- 
ing the  operation  of  the  transportation  lines  of  the  country  upon  a  sys- 
tem of  fixed  rates,  such  an  enactment  appears  to  be,  the  most;  effective 
remedy  for  the  prevailing  evils  of  unjust  discrimination,  and  the  com- 
mittee believes  that  the  experiment  should  be  tried.  If  the  publicity 
of  rates  and  the  prevention  of  unjust  discrimination  can  be  secured,  a 
long  step  forward  will  have  been  taken,  and  the  people  will  wait  pa- 
tiently until  evils  of  less  importance  can  be  remedied. 


A  NATIONAL  COMMISSION— ITS  ESTABLISHMENT  RECOM- 
MENDED FOR  THE  ENFORCEMENT  OF  THE  LEGISLATION 
PROPOSED. 

In  the  prosecution  of  the  inquiry  with  which  the  committee  was 
charged  the  following  questions  was  included  in  the  interrogatories  pro- 
pounded by  circular  to  those  invited  to  express  their  views  in  writing, 
and  was  also  in  substance  asked  those  who  were  examined  in  person  : 

In  what  manner  can  legislation  for  the  regulation  of  inter-State  commerce  be  best 
enforced?  Should  a  commission  or  other  special  tribunal  be  established  to  carry  out 
the  provisions  of  any  law  Congress  may  enact  ? 

An  examination  of  the  testimony  and  written  statements  accompany- 
ing this  report  will  show  that  nearly  all  of  those  who  expressed  an 
opinion  on  the  subject  favored  the  creation  of  a  national  commission  or 
other  special  tribunal,  or  of  a  govermental  department,  to  be  charged 
with  the  duty  of  carrying  out  and  enforcing  whatever  legislation  may 
be  enacted  for  the  regulation  of  inter-State  commerce.  It  may  fairly 
be  said  that  there  is  a  substantial  agreement  in  favor  of  the  establish- 
ment of  a  national  railroad  commission  on  the  part  of  the  large  number 
of  persons  whose  views  upon  the  proposition  were  ascertained  by  the 
committee.  The  unexpected  unanimity  of  the  testimony  in  favor  of  the 
creation  of  such  a  commission,  the  reasons  assigned  in  advocacy  of  such 
a  tribunal,  and  the  general  current  of  opinion  in  that  direction,  are  sat- 
isfactorily shown  by  the  following  brief  extracts  from  statements  made 
by  gentlemen  representing  every  interest,  all  parts  of  the  country,  and 
every  shade  of  opinion  on  the  subject  of  railway  regulation. 

Mr.  John  D.  Kernan,  chairman  of  the  New  York  railroad  commis- 
sion, said : 


There  is  no  more  effective  agency  than  a  railroad  commission  for  the  purpose  of  aid- 
ing the  courts  in  carrying  out  any  law  on  this  subject.  I  believe  that  you  have  got 
to  have,  to  aid  in  carrying  out  the  principles  of  the  statute  suggested,  a  national 
railroad  commission,  and  for  these  reasons  :  The  subject  isone  requiring  special  study 
in  order  to  acquire  that  knowledge  which  enables  legislation  to  be  enacted  or  judi- 
cial authority  to  be  effectively  exercised.  I  think  a  commission  invested  with  the 
power  of  ascertaining  the  facts  without  expense  to  shippers,  keeping  investigations 
progressing  all  the  time  in  reference  to  this  subject,  and  enlightening  the  ponpl"  and 


INTERSTATE   COMMENCE. 

the  legislature  and  Congress,  is  essential  iu  order  to  determine  how  far  railroads  aro 
complying  with  the  statute  which  you  pass  upon  this  subject.  *  *  *  I  do  uot 
think  any  statute  you  pass  upon  the  question  would  be;  of  any  cllcctivc  benclit  unless 
you  proride  for  a  commission.  (Testimony,  pp.  19  and  20.) 

Mr.  William  E.  Rogers,  of  the  same  board,  said: 

I  think  if  such  a  commission  were  created,  from  the  experience  it  would  get  in  the 
course  of  a  year  or  two,  most  valuable  results  would  follow.  I  do  not  sew  how  the 
information  can  be  obtained  iu  any  other  way  than  from  the  every-day  experience 
resulting  from  the  complaints  brought  before  it.  (Testimony,  p.  32.) 

Mr.  Simon  Sterne,  of  New  York,  in  reply  to  a  question  as  to  the  effect 
of  a  law  for  the  regulation  of  the  railroads  without  a  commission,  said: 

That  would  be  a  bull  against  the  moon.  I  speak  advisedly  upon  that  subject,  be- 
cause it  is  not  merely  my  opinion,  but  you  will  rind  that  in  report  after  report  of  the 
English  railway  committees,  from  1854  down  to  187:5,  they  say  that  the  Curd  well  act 
and  the  other  acts  are  ncr,  self-enforcing.  *  *  •  The  ordinary  courts  are  all  <  pen 
theoretically,  but  they  aro  closed  practically  to  the  individual  man  who  has  a 
grievance,  and  there  are  two  reasons  for  that.  The  tirst,  already  mentioned,  is  the 
expense;  and  the  second,  which  is  a  still  stronger  impediment,  is  the  fact  that  the 
individual  trader  does  not  want  to  incur  the  enmity  of  an  instrumentality  which  he 
is  compelled  to  use  from  day  today.  (Testimony,  p.  Gli.) 

Mr.  Albert  Fink  said: 

I  am  in  favor  of  having  a  competent  commission  fippointed  for  the  purpose  of  col- 
lecting information,  in  order  to  help  to  a  proper  understanding  of  this  intricate  sub- 
ject, such  commission  to  be1  empowered  to  receive  complaints  and  to  investigate  the 
same,  and  to  act  as  a  mediator  and  counselor  between  the  railroads  and  the  public. 
Much  good  can  be  done  by  a  competent  commission,  not  only  in  bringing  about  a 
proper  understanding  between  the  railroads  and  shippers,  but.  in  actually  remedying 
a  great  many  causes  of  complaint.  (.Tesliuum \ ,  p.  I,'.!.; 

Mr.  George  R.  Blanehard  stated  that — 

Kecogni/.ing.  perhaps,  a  little  in  advance  of  some  of  my  fellow  railroad  officers,  the 
right  and  interest  of  the  public  in  the  deliberation  and  discussion  and  decision  of 
these  questions,  I  have  advocated  a  national  railway  commission  for  live  years. 
(Testimony,  p.  1ST.) 

Mr.  Jacksou  S.  Schultz,  a  prominent  merchant  of  New  York,  who 
represented  the  Chamber  of  Commerce  before  the  committee,  after  de- 
tailing unlawful  practices  by  the  railroads  within  his  knowledge,  was 
asked  what  remedy  he  had  to  suggest.  His  answer  was: 

I  say  the  remedy  is  a  commission ;  I  go  s->  far  as  to  say  that  if  the  commission  had 
tot  anymore  power  llian  our  Slate  commission,  and  that  is  to  report  and  keep  the 
public,  advised  on  what  is  being  done,  hail  not  the  right,  to  send  for  persons  and  pa- 
pers and  examine  the  books,  so  far  as  I  am  personally  concerned  I  am  willing  to  limit 
the  powers  in  the  iirst  instance  to  the  commonest  powers  and  duties.  (Testimony, 
pp.  -2u;{,  2154.) 

Ex-Governor  Claflin,  of  Massachusetts,  said: 

My  own  idea  is  to  establish  a  United  States  commission  to  regulate  these  things  as 
fur  as  it  can  ;  and  then  what  further  is  to  be  done  must  be  a  matter  of  growth.  Aa 
you  liud  abuses  those  almsrs  must  be  brought  to  the  attention  of  Cougress,  and  laws 
will  be  passed  which  will  correct  them.  If  there,  is  no  abuse,  if  the  commission  is 
not  needed,  the  people  of  the  country  will  find  it  out.  It  is  not  a  great  experiment 
to  try.  *  *  *  I  believe  that  a  commission  can  1m  established  which  would  give 
satisfaction  to  the  people  all  through  the  country.  The  commission  certainly  has 
given  satisfaction  in  this  State.  There  was  just  as  much  doubt  with  the  people  of 
this  State  at  one  time,  in  regard  to  the  establishment-  of  a  State  commission,  as  there 
is  with  the  people  of  the  United  States  now  in  regard  to  the  establishment  of  a  na- 
tional commission.  (Testimony,  pp.  :*88  and  :tih!. ) 

Mr.  Frank  .1.  Firth,  of  Philadelphia,  president,  of  the  Erie  and  West- 
ern Transportation  Company,  said : 

I  am  of  the  opinion  that  there  should  be  a  national  board  of  commissioners  created, 
and  lhat  the  duties  assigned  to  this  board  should  include  the  investigation  of  quea- 

S.  Eep.  46 14 


210  INTERSTATE    COMMERCE. 

tions  connected  with  inter-State  commerce,  the  determining  of  admiied  facts  with 
reference  to  current  transportation  practices,  the  recommendation  oi'  the  legislation 
that  these  facts  seein  to  make  necessary,  and  the  serving  as  arbitrators  to  decide 
questions  that  may  he  voluntarily  submitted,  (Testimony,  p.  46-1.) 

Mr.  George  W.  0.  Clarke,  of  Philadelphia,  stated: 

I  have  taken  so  far  as  I  could  a  consensus  of  the  views  of  merchants  and  manu- 
facturers from  Maine  to  California  upon  this  question,  and  actually  in  those  two 
States,  and  tiie  general  direction  of  the  mercantile  community,  so  far  as  I  have  been 
able  to  gather,  is  in  favor  of  Congress  establishing  a  commission.  (Testimony,  p.  490. ) 

Mr.  Robert  Elliott,  a  grain  merchant  of  Milwaukee,  referring  to  the 
necessity  of  regulation,  said : 

The  majority  of  opinions  favor  its  being  done  through  a  commission  that  would 
be  vested  with  power  to  fight  the  battle  of  the  aggrieved  party,  so  that  he  should 
not  be  compelled  to  go  into  court  and  wrestle  with  this  matter.  The  burden  of  the 
tight  should  be  upon  the  commission.  They  should  bring  the  delinquent  road  into 
court.  If  that  were  the  ease,  you  would  not  have  any  such  delinquents.  They 
would  desist  from  any  such  practices,  and  the  citizen  would  only  have  to  lay  his 
claim  before  the  commission,  and  the  commission  would  only  need  to  call  the  atten- 
tion of  the  delinquent  road  to  the  fact,  and  the  wrong  would  be  promptly  corrected. 
I  have  great  faith  in  the  efficacy  of  legislation  upon  the  general  question  and  in  the 
workings  of  a  commission.  (Testimony,  p.  f>94.) 

Mr.  George  M.  Bogue,  of  Chicago,  for  six  years  a  member  of  the  Illi- 
nois railroad  commission,  and  now  arbitrator  of  the  railroad  pools  west 
of  Chicago,  expressed  himself  as  follows: 

I  think  that  if  a  commission  were  instituted  with  ndvisory  or  arbitrative  duties 
conferred  upon  it,  similar  to  those  conferred  by  the  Massachusetts  law  and  the  ad- 
visory feature  of  the  Iowa  law,  good  could  be  accomplished.  By  the  hearing  of  com- 
plaints, and  the  treating  of  those  complaints  as  between  the  individuals  or  communi- 
ties and  the  railroads  themselves,  I  think  a.  vastly  greater  amount  of  good  could  be 
accomplished  with  a  board  clothed  with  such  authority  than  could  be  accomplished 
by  a  board  clothed  with  authority  to  fix  rates.  (Testimony,  p.  746.) 

William  H.  Miller,  secretary  of  the  Board  of  Trade  of  Kansas  City, 
thought  that — 

A  railway  commission  should  be  empowered  to  enforce  any  law  that  might  be  en- 
acted by  Congress  for  the  government  of  railroads.  The  method  of  business  and  the 
rules  laid  down  for  the  railroads  to  observe,  in  that  matter  should  be  enforceable  by 
the  commission.  The  power  of  the  commission  should  extend  to  a  supervision  of  the 
whole  matter;  that  is,  an  investigation  of  the  whole  matter,  and  to  listen  to  and  hear 
complaints  of  the  people  that  may  be  made  of  discriminations  and  unjust  arrange- 
ments. (Testimony,  p.  900.) 

Judge  McDill,  of  the  Iowa  railroad  commission,  stated  that — 

I  have  thought  for  years  that  the  only  method  by  which  there  could  be  any  iutelli- 
agent  nd  sufficient  control  would  be  through  a  national  commission.  (Testimony,  p. 
948.) 

Mr.  Peter  A.  Dey,  chairman  of  the  Iowa  commission,  011  being  asked 
if  he  thought  inter-Stete  commerce  could  be  regulated  without  a  com- 
mission, replied: 

No,  sir,  I  think  not.  Let  me  explain  my  idea.  I  think  there  are  no  two  cases  that 
are  presented  where  there  is  not  some  difference  between  them  ;  and  my  impression  is 
that  you  have  to  examine  each  case,  by  itself.  I  do  not  think  yon  can  make  any  gen- 
eral law  that  will  cover  all  cases.  (Testimony,  p.  958.) 

Mr.  J.  M.  Joseph,  a  farmer  of  Iowa,  said: 

I  think  there  ought  to  be  a  national  board  of  commissioners,  with  power  to  employ 
experts  on  all  the  various  branches.  I  see  no  reason  why  the  General  Government, 
or  even  th»  State,  should  not  have  the  benefit  of  the  knowledge  of  experts  in  railroad 
matters  just  as  well  as  railroads.  The^e  matters  are  all  arranged,  if  1  understand  it, 
by  experts  who  are  merely  employ6s  of  the  companies.  (Testimony,  p.  1029.) 


INTERSTATE    COMMERCE.  211 

Mr.  Jabez  Burrows,  a  farmer  of  Nebraska,  stated: 

I  am  in  favor,  and  have  been  Crowing  more  and  more  in  favor,  of  a  national  com- 
mission :  and  I  believe  that  that  is  the  general  opinion  of  the  country,  and  especially 
of  the  farmers.  (Testimony,  p.  1167.) 

Mr.  Charles  Francis  Adams,  jr.,  now  president  of  the  Union  Pacific 
Kail  way  Company,  expressed  himself  as  follows: 

I  have  always  thought  that  if  Congress  would  provide  for  a  commission  of  men  who 
were  -at  once  honest,  intelligent,  and  experienced,  whose  business  it  should  be  to 
observe  this  question  very  much  as  a  physician  would  observe  the  progress  of  disease, 
the  results  of  their  observations  might  be  of  value  in  leading  gradually  to  the  build- 
ing up  of  legislation.  But  beyond  that  I  do  not  believe  it  would  be  within  the  power 
of  human  wisdom  to  formulate  a  law  which  would  greatly  affect,  except  to  impede 
and  hamper,  the  present  course  of  events.  I  think  such  a  commission  could  observe 
the  condition  of  afl'airs,  and  very  likely  a  system  of  law  would  gradually  bniid  itself 
up,  as  the  result  of  experience  and  observation,  which  would  be  of  value;  bnt  it  would 
take  time.  (Testimony,  p. 


Mr.  William  B.  Dean,  a  merchant  of  Saint  Paul,  representing  the 
Jobbers'  Union  of  that  city,  referring  to  the  creation  of  a  commission, 
said: 

Upon  that  point  the  Jobbers'  Union  is  emphatically  favorable.  We  believe  the  rail- 
road question  is  comparatively  in  its  infancy  and  is  an  exceedingly  complex  one.  We 
believe  that  the  laws  which  will  ultimately  govern  it  have  hardly  begun  to  come  to 
the  surface,  and  that  those  laws  would  be  evolved  and  made  equal  more  quickly 
through  a  commission  whose  attention  would  be  directed  to  the  examination  of  com- 
plaints and  the  suggestion  of  remedies  than  by  any  method  now  in  vogue.  (Testi- 
mony, p.  1292.) 

Mr.  Oliver  Dalryinple,  the  great  farmer  of  Dakota,  thought  that  — 

The  time  has  come  when  a  national  commission,  with  its  identity  and  features  the 
same  as  the  part  of  the  Government  that  has  charge  of  the  currency  and  the  customs 
and  revenue  laws,  shoiild  have  an  existence  and  identity,  and  Congress  should  look 
after  these  great  interests.  (Testimony,  p.  133^.) 

Mr.  Datus  E.  Meyer,  a  farmer  of  Minnesota,  representing  the  Farm- 
ers' Alliance  of  that  State,  said  : 

I  would  put  a  commission  between  the  farmer  and  the  railroads  that  would  see  that 
he  obtains  justice.  That  is  what  I  would  have  done,  and  what  the  farmers  desire 
shall  be  done.  You  can  depend  upon  that.  (Testimony,  p.  1337.) 

Mr.  J.  P.  Thompson,  chairman  of  the  Kentucky  railroad  commission, 
stated  : 

The  best  plan  I  can  suggest  is  a  national  commission,  composed  of  men  of  broad, 
liberal  views,  who  will  be  impartial  toward  the  transportation  interest  as  well  as  the 
shipping  interest.  *  *  *  A  law  with  no  one  charged  specially  to  see  to  its  execu- 
tion would  be  almost  a  dead  letter.  Everybody's  business  is  nobody's  business.  The 
railroad  commissioners  would  be  constantly  watching  the  transportation  interest. 
They  would  constitute  a  tribunal  to  which  the  transportation  companies  could  appeal 
to  settle  differences  among  themselves  and  to  which  the  people  could  appeal  without 
cost  or  expense.  (Appendix,  p.  14.) 

The  railroad  commissioner  and  deputy  commissioner  of  Michigan  say: 

Should  legislation  be  perfected  by  Congress  for  the  purpose  of  regulating  inter- 
State  commerce,  its  provisions  will  unquestionably  have  to  be  carried  into  effect  by  a 
commission  to  be  organized  for  the  purpose.  (Appendix,  p.  46.) 

In  the  paper  submitted  by  the  Produce  Exchange  of  Toledo,  Ohio,  it 
is  stated  : 

We  believe  the  only  good  and  reliable  method  of  regulating  inter-State  commerce 
in  this  country  is  by  the  establishment  of  a  transportation  or  railway  bureau,  with  a 
commission  of  a  suitable  number  of  competent  arid  experienced  gentlemen,  with  power 
to  regulate  and  establish  systems  of  railway  rates  and  travel  throughout  the  country. 
Before  this  commission  complaints  should  be  made,  or  to  its  individual  members,  and 
these  commissioners  should  have  the  power  to  compel  the  railways  to  deal  fairly  by 


212  INTERSTATE    COMMERCE. 

shippers.  No  individual  shipper  can  contest  a  case  with  a  railroad  company  without 
being  confronted  with  a  final  decision  in  the  United  States  court  at  Washington,  and 
any  city  or  trading  point  would,  of  course,  expect  the  same  delay  and  result.  A  com- 
mission to  hear  complaints  and  employ  the  power  of  the  Government  to  prosecute 
such  as  are  reasonable  is  the  salient  feature  to  be  embodied  in  any  bill  for  the  protec- 
tion of  the  rights  of  shippers.  (Appendix,  p.  73.) 

The  Traders  and  Travelers'  Union  of  New  York  express  the  belief 
that— 

Legislation  for  the  regulation  of  inter-State  commerce  can  best  be  enforced  by  a 
national  commission.  (Appendix,  p.  101.) 

Mr.  Cyrus  G.  Luce,  master  of  the  Michigan  State  Grange,  says: 

My  own  opinion  is  that  a  regulating  law  should  be  passed  restricting  and  fixing 
rates  so  far  as  possible  consistent  with  justice,  aud  that  th««  a  tribunal  or  com- 
mission should  be  established  to  enforce  the  law ;  and  in  addition  to  this  it  should 
be  clothed  with  discretionary  power  to  enforce  necessary  rules  to  insure  the  desired 
results.  (Appendix,  p.  111.) 

Mr.  W.  H.  Nelson,  master  of  the  Tennessee  State  Grange,  says: 
Much  has  been  said  against  commissions,  but  most  of  these  arguments  might  be 
turned  with  equal-propriety  aginst  any  public  trust  or  office.  We  are  decidedlv  in 
favor  of  a  commission,  but  without  any  grant  of  arbitrary  powers  to  militate  agi.nst 
the  rights  or  interests  of  corporations.  We  think  that  the  commission  should  have 
power,  and  be  instructed,  to  co-operate  with  State-  commissions,  and  should  be  re- 
quired to  enforce  the  laws  by  advisory  consultation,  if  possible,  but  through  the 
courts  if  necessary.  (Appendix,  p.  114.) 

Mr.  Milton  George,  secretary  of  the  National  Farmers'  Alliance, 
thought  that — 

A  commission  or  other  tribunal  should  be  established  to  enforce  legislation  for  the 
regulation  of  inter-State  commerce.  (Appendix,  p.  118.) 

Mr.  E.  A.  Giller,  master  of  the  State  Grange  of  Illinois,  is  of  the 
opinion  that — 

In  order  to  enforce  legislation  there  ought  to  be  authority  of  some  kind,  so  that 
those  having  grievances  could  make  the  same  known  and  have  the  matter  attended 
to  without  expense  to  the  complainant.  (Appendix,  p.  121.) 

Mr.  J.  L.  Neal,  master  of  the  Kentucky  State  Grange,  believes  that — 

Legislation  for  the  regulation  of  inter-State  commerce  can  best  be  enforced  by  a 
commission  composed  of  one  good  man  from  all  the  leading  interests  except  agricult- 
ure, and  as  that  is  the  greatest  of  all  interests  we  should  have  two  on  the  commis- 
sion. (Appendix,  p.  122.) 

Mr.  J.  D.  Lyman,  lecturer  of  the  New  Hampshire  State  Grange, 
writes : 

The  best  method  of  preventing  extortion  and  unjust  discrimination  is  by  the  best 
laws  that  can  be  devised  and  wise  and  just  commissioners  with  large  powers.  (Ap- 
pendix, p.  123.) 

Mr.  Miles  Norton,  secretary  of  the  Farmers'  Alliance  of  Wisconsin, 
says: 

The  regulation  of  inter-State  commerce  can  best  be  enforced  by  law  of  Congress 
through  commissioners.  (Appendix,  p.  123.) 

Mr.  S.  C.  Carr,  master  of  the  Wisconsin  State  Grange,  believes  that — 

Legislation  can  best  be  enforced  by  good  officers,  and  a  commission  should  be  es- 
tablished to  carry  out  the  provisions  of  any  law  Congress  may  enact.  (Appendix,  p. 
125.) 

Mr.  Frank  W.  Tracy,  president  of  the  Central  Illinois  Coal  Company, 
writes: 

I  have  advocated  a  commission  throughout,  and  do  not  believe  a  law  can  be  made 
a  success  without  a  commission,  who  can  reduce  the  amount  of  friction  between  the 
public  and  corporations,  until  they  understand  that  the  interests  of  each  are  imlenti- 
cal.  If  for  no  other  reason  than  this,  u  commission  would  be  a  great  public  blessing. 
(Appendix,  p.  176.) 


INTERSTATE    COMMERCE.  213 

It  appears  from  the  evidence  that  the  opposition  to  the  establishment 
of  a  national  commission  is  confined  to  a  small  minority  ot  those  whose 
views  upon  the  subject  have  been  recorded,  and  as  expressed  to  the 
committee  their  opposition  seems  to  have  been  based  largely  upon  the 
erroneous  supposition  that  a  commission  is  proposed  as  a  substitute  for 
specific  regulation  by  statute.  This  misapprehension  is  perhaps  due  to 
the  fact  that  some  of  the  earlier  commission  bills  presented  in  Congress 
provided  simply  for  the  organization  of  a  body  whose  principal  function 
was  to  be  to  investigate  the  subject  and  report  as  to  the  necessity  of 
legislation,  but  the  time  for  seriously  entertaining  such  measures  has 
now  gone  by. 

One  of  the  favorite  arguments  of  the  opponents  of  a  special  tribunal 
has  been  that  the  contemplated  commission  is  a  mere  subterfuge,  in 
tended  as  a  harmless  concession  to  the  popular  demand  for  legislation, 
designed  to  be  of  no  advantage  to  the  citizen  with  a  complaint  and  no 
disadvantage  to  the  corporations  concerned,  and  that  the  commission 
scheme  is  simply  a  procrastinating  device  invented  by  the  railroads, 
which  if  adopted  would  leave  the  people  more  completely  at  their  mercy 
than  they  are  now. 

No  such  proposition  could  receive  the  approval  or  indorsement  of 
this  committee.  The  commission  proposed  in  the  bill  herewith  re- 
ported is  not  designed  to  be  a  substitute  for  specific  regulation,  but  it 
is  designed  and  believed  to  be  a  valuable  auxiliary  agency  in  facilitat- 
ing and  securing  the  enforcement  of  whatever  regulations  may  be  pre- 
scribed by  Congress.  The  sum  and  substance  of  the  proposition  was 
tersely  stated  by  Mr.  F.  B.  Thurber,  of  New  York,  one  of  the  best  known 
advocates  of  railway  regulation,  when  he  said: 

We  iieed  first  a  specific  prohibition  of  practices  generally  admitted  to  be  wrong, 
together  with  an  Executive  to  see  that  the  laws  are  executed.  Laws  without  a  po- 
lice force,  or  a  police  force  without  laws,  are  equally  useless.  (Testimony,  p.  27:>. ) 

Iii  the  light  of  all  the  evidence  and  the  facts  before  it,  the  committee 
has  become  satisfied  that  no  statutory  regulations  which  may  be  enacted 
can  be  made  fully  effective  without  providing  adequate  and  suitable 
machinery  for  carrying  them  into  execution.  "What  is  everybody's 
business  is  nobody's  business,"  and  the  conclusion  seems  irresistible 
that  specific  enactments  must  inevitably  fail  to  remedy  the  evils  they 
are  designed  to  cure  unless  an  executive  board  be  organized  for  the 
special  purpose  of  securing  their  enforcement.  Such  enactments  cannot 
possibly  be  self-enforcing,  and  whenever  attempts  have  been  made  to 
control  or  regulate  commercial  transactions  it  has  been  found  necessary 
to  do  so  through  a  special  instrumentality.  Whatever  policy  of  regu- 
lation may  be  adopted,  whether  it  be  the  most  conservative  or  the  most 
radical  that  can  be  suggested,  and  from  whatever  point  of  view  the 
question  of  regulation  may  be  regarded,  we  are  convinced  that  the  pro 
posed  commission  will  prove  equally  essential  and  valuable  in  carrying 
into  effect  such  lemedial  legislation  as  may  be  enacted  for  the  protec- 
tion of  the  people  against  the  grievances  of  which  they  complain. 

It  will  be  said  that  the  only  proper  and  satisfactory  remedy  for  wrong- 
doing on  the  part  of  transportation  companies  is  to  be  found  in  the  pro- 
hibition of  unjust  practices  and  the  enforcement  of  these  statutory  re- 
strictions by  the  courts,  and  this  will  be  supplemented  by  the  statement 
that  every  citizen  should  have  an  opportunity  to  enforce  his  rights  by 
judicial  proceedings  in  his  local  courts,  and  not  be  compelled  to  rely 
upon  a  special  tribunal  located  at  the  national  capital  and  practically 
beyond  his  reach. 


214  INTERSTATE    COMMERCE. 

What  do  these  declarations  actually  mean?  It  is  true  that  reliance 
must  ultimately  be  had  upon  the  courts  in  any  event  for  the  final 
remedy.  Unless  the  commission  itself  be  constituted  a  court,  which 
the  committee  does  not  consider  expedient,  the  final  determination  of 
all  contested  proceedings  instituted  under  any  laws  that  may  be  passed 
by  Congress  must  rest  with  the  courts  of  the  United  States.  No  other 
courts  can  assume  or  can  be  clothed  with  jurisdiction  in  proceedings 
arising  under  Congressional  enactments,  which  cannot  in  any  way  affect 
the  local  tribunals  of  the  States. 

Nor  is  it  proposed  to  compel  any  citizen  to  rely  solely  upon  the  com- 
mission recommended  by  this  committee,  or  to  debar  him  from  seeking 
redress  for  grievances  from  the  judicial  tribunals  of  the  United  States, 
if  he  shall  prefer  to  have  recource  to  them.  On  the  contrary,  it  is  ex- 
pressly provided  that  he  shall  be  free  to  pursue  his  remedy  at  common 
law  or  under  the  statute  herein  recommended,  at  his  own  discretion. 
It  is  not  proposed  to  in  any  manner  restrict  the  choice  of  remedies  now 
available,  but  it  is  proposed  to  provide  additional  means  of  obtaining 
redress  with  much  less  difficulty  and  expense,  and  to  render  those 
already  existing  very  much  more  effective. 

This  can  best  be  accomplished,  it  is  believed,  by  making  the  reports 
and  recommendations  of  the  commission  prima  facie  evidence  as  to  the 
facts  found  in  all  cases  which  it  investigates.  This  would  do  more 
towards  placing  the  shipper  upon  an  equality  with  the  carrier  in  a  legal 
controversy  than  anything  else  that  has  been  suggested,  and  would  to 
a  considerable  extent  obviate  the  almost  unsurmountable  difficulties 
now  encountered  by  the  shipper.  (See  pp.  168,  169.) 

With  such  a  change  in  the  rules  of  evidence  a  favorable  report  by  the 
commission  would  substantially  establish  the  case  of  the  complainant, 
should  judicial  proceedings  become  necessary,  as  it  would  lift  from  his 
shoulders  the  burden  of  proof  and  transfer  it  to  the  carrier.  By  thus 
placing  the  carrier  upon  the  defensive  and  by  relieving  the  shipper  of 
the  most  serious  disadvantage  under  which  he  now  suffers,  the  acqui- 
escence of  the  corporations  in  the  findings  of  the  commission  would  be 
practically  assured,  while  the  people  would  be  given  the  benefit  of  the 
investigations  made  by  the  commissioners  in  their  behalf.  The  experi- 
ence of  the  States  which  have  adopted  this  plan  justifies  the  belief  that  a 
national  commission  organized  as  proposed  would  succeed  in  satisfactorily 
adjusting  most  of  the  complaints  lodged  with  it  without  expense  to  the 
shipper,  without  delay,  and  without  resort  to  litigation.  In  fact,  the 
shipper  would  have  much  to  gain  and  nothing  to  lose  by  appealing  to 
such  a  commission,  and  even  should  he  fail  to  secure  satisfaction  would 
be  in  no  worse  condition  than  before. 

But  the  value  of  the  proposed  commission  must  not  be  measured  solely 
by  its  probable  success,  or  want  of  success,  in  adjusting  differences  be- 
tween shipper  and  carrier.  Other  wide  fields  of  usefulness  would  lie 
open  before  it.  In  undertaking  the  regulation  of  inter- State  commerce 
Congress  is  entering  upon  a  new  and  untried  field.  Its  legislation  must 
be  based  upon  theory  instead  of  experience,  and  human  wisdom  is  in- 
capable of  accurately  forecasting  its  effect  upon  the  vast  and  varied 
interests  to  be  affected.  The  magnitude  of  these  interests  and  every 
consideration  of  prudence  and  justice  demand  that  provision  should  be 
made  for  an  intelligent  investigation  of  the  operation  of  the  regulations 
prescribed,  in  order  that  Congress  may  be  kept  advised  as  to  the  results 
of  its  action.  Without  such  a  precaution  experimental  legislation  of 
this  character  would  hardly  be  justified. 

The  proposed  commission  would  also  serve  a  useful  purpose  in  col 


INTERSTATE    COMMERCE.  215. 

lectiug  and  giving  publicity  to  accurate  information  concerning  the 
affairs  and  transactions  of  the  corporations  engaged  in  inter-State  com- 
merce. The  commissioners  should  be  given  ample  authority  and  every 
facility  for  acquiring  information.  They  should  be  empowered  to  pre- 
scribe the  manner  in  which  such  corporations  shall  keep  their  accounts, 
and  to  require  of  them  uniform  reports  at  such  times  as  they  may  desig- 
nate and  upon  such  subjects  as  they  may  deem  of  public  interest. 
This  work  intelligently  performed  would  year  by  year  remove  "  the 
railroad  problem  n  farther  from  the  realm  of  conjecture  and  specula- 
tion, and  would  make  it  possible  to  gradually  buildup  a  system  of  reg- 
ulation upon  the  safe  and  enduring  foundation  of  certain  knowledge. 

Many  other  important  duties  would  devolve  upon  the  proposed  com- 
mission, and  when  it  is  brought  into  existence,  as  it  assuredly  will  and 
must  be,  sooner  or  later,  the  final  solution  of  the  difficult  problem  of 
regulation  will  have  been  greatly  hastened.  The  committee  believe 
with  Judge  Cooley  that  this  final  solution  is  "likely  to  be  found  in 
treating  the  railroad  interest  as  constituting  in  a  certain  sense  a  section 
by  itself  of  the  political  community  and  then  combining  in  its  manage- 
ment the  State,  representing  the  popular  will  and  general  interests, 
with  some  definite,  recognized  authority  on  the  part  of  those  imme- 
diately concerned,  much  as  State  and  local  authority  are  now  combined 
for  the  government  of  municipalities.  Something  of  the  sort  would 
neither  be  uuphilosophical  nor  out  of  accord  with  the  general  spirit  of 
our  institutions.'  (Appendix,  p.  12.) 


THE  COMMITTEE'S  BILL. 

The  committee  has  given  the  subject-matter  of  the  inquiry  with  which 
it  was  charged  careful  examination  and  consideration,  and  the  bill  re- 
ported herewith  embodies  its  most  deliberate  judgment,  with  the  best 
light  it  has  been  able  to  obtain,  upon  the  varied  and  complex  questions 
involved.  This  measure  is  not  offered  as  a  panacea  for  all  the  evils 
growing  out  of  the  management  of  the  transportation  system  of  which 
the  people  have  for  years  complained,  and  for  which  they  are  disposed 
to  seek  a  legislative  cure.  Indeed,  as  we  have  already  said,  "  That 
a  problem  of  such  magnitude,  importance,  and  intricacy  can  be  sum- 
marily solved  by  any  master-stroke  of  legislative  wisdom  is  beyond 
the  bounds  of  reasonable  belief."  Neither  is  it  simply  a  tentative 
measure  intended  to  pave  the  way  for  additional  legislation.  Its  prac- 
tical application,  if  it  should  become  a  law,  may  demonstrate  that  some 
of  its  features  are  inexpedient,  or  unjust  to  the  corporate  carriers  of  the 
country,  or  prejudicial  to  the  public  interests.  While  there  have  nat- 
urally been  differences  of  opinion  among  the  members  of  the  committee 
as  to  certain  of  the  less  important  features  and  provisions  of  the  bill 
in  its  entirety,  and  in  its  general  scope,  purposes,  and  methods,  it  rep- 
resents the  substantially  unanimous  judgment  of  the  committee  as  to 
the  regulations  which  are  believed  to  be  expedient  and  necessary  for 
the  government  and  control  of  the  carriers  engaged  in  inter  State  traffic. 

The  provisions  of  the  bill  are  based  upon  the  theory  that  the  para- 
mount evil  chargeable  against  the  operation  of  the  transportation  sys- 
tem of  the  United  States  as  now  conducted  is  unjust  discrimination 
between  persons,  places,  commodities,  or  particular  descriptions  of 
traffic.  The  underlying  purpose  and  aim  of  the  measure  is  the  pre- 
vention of  these  discriminations,  both  by  declaring  them  unlawful  and 
adding  to  the  remedies  now  available  for  securing  redress  and  enforcing 


216  INTERSTATE   COMMERCE. 

punishment,  and  also  by  requiring  the  greatest  practicable  degree  of 
publicity  as  to  the  rates,  financial  operations,  and  methods  of  manage- 
ment of  the  carriers. 

The  committee  has  been  unable  to  fully  cover  the  wide  field  of  in- 
quiry opened  up  by  this  investigation,  and  has  necessarily  omitted  or 
dismissed  with  an  incidental  reference  subjects  and  matters  of  interest 
which  could  not  well  be  passed  in  review ;  but  its  general  conclusions 
and  recommendations,  as  set  forth  in  this  report  and  in  the  accompa- 
nying bill,  include  the  consideration  of  the  questions  deemed  of  most 
importance  in  connection  with  the  legislation  proposed. 

In  conclusion,  the  committee  desires  to  express  the  hope  that  the  in- 
formation contained  in  this  report  and  the  accompanying  testimony 
and  the  views  expressed  by  the  committee  may  prove  of  some  value  to 
the  Senate  and  to  the  country  in  contributing  to  an  enlightened  solu- 
tion of  the  great  problem  of  justly  yet  effectively  regulating  the  cor- 
porate carriers  engaged  in  transportation. 


STATEMENTS  AS  TO  THE  REGULATION  OF  INTERSTATE  COM- 
MERCE BY  CONGRESS  SUBMITTED  TO  THE  SENATE  SELECT 
COMMITTEE  ON  INTERSTATE  COMMERCE. 


Following  is  a  copy  of  the  circular  issued  by  the  committee  soon  after 
its  appointment,  in  response  to  which  the  statements  herewith  submitted 
have  been  received : 

[Committee:   Shelby  M.  Cnllom,  Warner  Miller,  Orville  H.  Platt,  Arthur  P.  Gorman,  Isham  G. 

Harris.] 

UNITED  STATES  SENATE, 
SELECT  COMMITTEE  ON  INTERSTATE  COMMERCE, 

Washington,  April  10,  1885. 

DEAR  SIR  •  A  select  committee  has  been  appointed  by  the  United  States  Senate  to 
investigate  the  questions  involved  in  the  regulation  of  interstate  commerce  by  Con- 
gress, and  has  been  especially  instructed  to  investigate  and  report  upon  the  snbject 
of  the  regulation  of  the  transportation  of  freights  and  passengers  between  the  several 
States  by  railroads  and  by  water  routes  in  connection  or  in  competition  with  said 
railroads. 

In  carrying  out  these  instructions  the  committee  propose  to  take  testimony  at  some 
of  the  commercial  centers  of  the  country,  and  to  give  representatives  of  every  interest 
affected  an  opportunity  to  be  fully  and  fairly  heard ;  and  in  order  to  make  the  testi- 
mony taken  as  valuable  and  compact  as  possible,  it  is  desired  that  the  various  organ- 
izations, associations,  corporations,  and  branches  of  trade  and  production  concerned 
in  legislation  upon  this  subject  shall  officially  authorize  one  or  more  persons  to  rep- 
resent them  before  the  committee  and  present  their  views  either  in  person  or  in 
writing. 

As  the  chief  object  of  this  investigation  is  to  obtain  information  that  will  be  of 
practical  value  to  Congress  in  framing  legislation  for  the  regulation  of  commerce 
between  the  several  States,  it  has  been  deemed  advisable  to  direct  the  attention  of 
those  willing  to  aid  the  committee  in  its  undertaking  to  the  line  of  investigation 
which  it  is  proposed  to  pursue  and  to  some  of  the  subjects  upon  which  informatioii 
is  especially  desired. 

The  general  purpose  of  the  investigation  is  to  ascertain  what  substantial  grounds 
of  complaint  now  exist  in  any  part  of  the  United  States  as  to  the  methods  of  opera- 
tion of  transportation  companies  engaged  in  interstate  commerce,  and  as  to  their 
relations  with  those  who  have  dealings  with  them,  and  to  what  extent  and  in  what 
manner  legislation  by  Congress  can  remove  these  grounds  of  complaint. 

This  inquiry  will  involve  the  consideration  of  a  number  of  incidental  questions  that 
may  be  briefly  outlined  as  follows : 

1.  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  discrimina- 
tion by  corporations  engaged  in  interstate  commerce. 

2.  The  reasonableness  of  the  rates  now  charged  by  such  corporations  for  local  and 
through  traffic. 

3.  Whether  publicity  of  rates  should  be  required  by  law  ;  whether  changes  of  rates 
without  public  notice  should  be  prohibited,  and  the  best  method  of  securing  uni- 
formity and  stability  of  rates. 

4.  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  interstate  commerce. 

5.  The  elements  of  cost,  the  conditions  of  business,  and  the  other  factors  that  should 
be  considered  in  fixing  the  tariffs  on  interstate  traffic. 

16232  AP 


2  INTERSTATE    COMMERCE. 

6.  Should  any  system  of  rebates  and  drawbacks  be  allowed  ?    If  so,  should  such 
transactions  be  regulated  by  law  and  be  subject  to  official  inspection  or  approval  ? 
Or  should  they  be  entirely  prohibited  ? 

7.  Should  pooling  contracts  and  agreements  between  railroads  doing  an  interstate 
business  be  permitted,  or  should  they  be  entirely  prohibited  by  la  w  f    If  they  should 
be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agreements  to 
be  made  public  and  subject  to  official  approval  ? 

8.  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  select  the 
lines  and  parts  of  lines  over  which  their  shipments  shall  be  transported  ? 

9.  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  passen- 
gers and  freights  by  all  the  corporations  engaged  in  interstate  commerce  be  best  se- 
cured ? 

10.  Should  corporations  engaged  in  interstate  commerce  be  permitted  to  charge  a 
lower  proportionate  rate  for  a  long  than  for  a  short  haul  ?    Does  the  public  interest 
require  any  legislation  on  that  subject  ? 

11.  Should  any  concessions  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  such  concessions  be  made  known  to  the  public  T 

12.  Should  corporations  engaged  in  interstate  commerce  be  required  to  adopt  a  uni- 
form system  of  accounts  f 

13.  Is  it  desirable  that  such  corporations  should  be  required  to  ma,ke  annual  re- 
ports to  the  Government  f    If  so,  what  information  as  to  their  earnings,  expenses,  and 
operations  should  such  reports  contain  ? 

14.  In  making  provision  for  securing  cheap  transportation,  is  it  or  is  it  not  im- 
portant that  the  Government  should  develop  aud  maintain  a  system  of  water  routes? 

15.  In  what  manner  can  legislation  for  the  regulation  of  interstate  commerce  be 
best  enforced  ?    Should  a  commission  or  other  special  tribunal  be  established  to  carry 
out  the  provisions  of  any  law  Congress  may  enact  ? 

The  committee  will  not  be  prepared  to  hold  formal  sessions  to  take  testimony  for 
several  weeks  yet.  In  the  mean  time  attention  to  this  circular  is  respectfully  re- 
quested, and  it  will  greatly  facilitate  the  work  of  the  committee  if  those  to  whom 
this  circular  is  addressed  will  submit  in  writing  their  views  in  relation  to  the  subjects 
covered  by  the  above  inquiries,  and  forward  them  to  the  chairman  at  Springfield, 
111.,  as  soon  as  convenient  before  the  10th  of  May  next. 
Respectfully, 

S.  M.  CULLOM, 

Chairman. 


THE  RAILROAD  COMMISSIONERS  OF  KANSAS. 

Statement  by  Messrs.  James  Humphrey,  L.  L,  Turner,  and  Almerln  Oil- 
lett,  composing  the  board  of  railroad  commissioners  of  the  State  of 
Kansas,  addressed  to  the  chairman. 

We  have  heretofore  been  deterred  from  entering  upon  a  discussion 
of  .the  subject  of  your  circular,  embracing  numerous  questions  pertain- 
ing to  the  subject  of  interstate- commerce  legislation,  from  the  number 
and  comprehensiveness  of  the  questions  propounded.  To  answer  them, 
or  even  a  part  of  them,  adequately,  would  involve  great  labor,  and  pre- 
suppose a  knowledge  of  a  very  great  and  difficult  subject  which  we  can- 
not pretend  to  possess.  To  your  late  invitation  to  state  to  the  commit- 
tee, in  a  general  way,  our  views  upon  such  of  the  matters  referred  to 
in  the  circular  as  we  deem  of  most  importance  to  the  public  we  feel  in- 
clined to  respond. 

MAXIMUM  RATES  IMPRACTICABLE. 

In  the  first  place,  we  are  of  the  opinion  that  a  national  commission 
should  be  established,  vested  with  certain  supervisory  powers  over  the 
subject  of  interstate  commerce.  Generally  these  powers  should  be 
confined  to  the  function  of  regulation,  and  not  to  the  management  of 
the  business  of  interstate  commerce.  In  this  connection  it  may  be 


INTERSTATE    COMMERCE.  6 

observed  that,  in  our  judgment  it  would  serve  no  useful  or  practical 
purpose  to  give  to  such  a  commission  the  power  to  establish  maximum 
rates,  for  either  passenger  or  freight  traffic,  over  interstate  lines  of  rail- 
wax  s.  The  subject  is  too  large  and  intricate  to  be  intelligently  dealt 
with  by  a  single  body  of  men,  even  t Lough  composed  of  men  trained  in 
the  study  and  business  of  railroad  affairs.  This  largely  results  from 
the  fact  that  the  situation  or  conditions  in  which  railroads  engaged  in 
interstate  traffic  are  found  and  are  operated  are  quite  different  in 
almost  every  State. 

Rates  of  charges  upon  railroad  traffic,  when  they  become  the  subject 
of  public  or  State  interference,  should,  in  order  to  conform  to  the  com- 
mon law  requisite  of  reasonableness  to  the  carrier  as  well  as  to  the 
shipper,  have  relation  to  the  cost  of  construction  and  of  bringing  the 
works  up  to  their  present  condition,  in  all  cases  at  least  where  the  ex- 
penditures for  betterments  or  cost,  subsequent  to  original  construction, 
have  become  capitalized  in  the  debt  or  stock  of  the  road;  the  volume 
and  character  of  traffic,  both  local  and  interstate,  which  each  road  is 
able  to  command  ;  the  expenses  incident  to  the  operation  and  manage- 
ment of  the  works,  and  the  amount  of  net  revenue  derived  from  the 
business  available  to  meet  the  necessary  or  fixed  charges,  and  to  answer 
reasonable  demands  upon  the  company  for  fair  dividends  to  stock- 
holders. 

To  tix  maximum  rates  without  reference  to  these  elements  and  condi- 
tions would  involve  the  exercise  of  arbitrary  power  on  the  part  of  the 
State,  and. in  so  far  as  it  defeated  the  fair  and  just  expectations  of  those 
whose  means  had  been  invested  in  these  important  enterprises,  they 
would  suffer  a  despotic  invasion  of  their  legitimate  interests.  Such  is 
the  diversity  of  conditions  existing  among  the  numerous  railroads  of 
the  country  engaged  in  interstate  traffic,  both  in  respect  to  physical 
condition,  character,  and  amount  Of  business,  and  their  respective  abili- 
ties to  earn  money,  each  road,  in  fact,  possessing  a  development  pecu- 
liar to  itself,  that  any  attempt,  either  by  Congress  or  a  commission  under 
its  authority,  to  establish  maximum  rates  for  the  regulation  of  interstate 
traffic  would  result  in  fixing  rates  sufficiently-high  as  to  enable  the  less 
favored  class  of  roads  to  operate  under  them  without  detriment  to  their 
permanent  prosperity ;  and  this  would  be  necessary  if  the  principle  of 
reasonableness  of  rates  were  to  prevail,  in  which  case  the  rates  would 
be  wholly  inoperative  and  furnish  no  criterion  to  the  more  favored  class 
of  roads  of  the  amount  to  be  charged  for  a  service  rendered,  or  else 
would  result  in  prescribing  rates  which,  though  not  unfair  to  the  last- 
named  class,  would  be  unjust  to  the  former  class  of  roads. 

A  result  so  undesirable  could  only  be  obviated  by  establishing  a  sepa- 
rate tariff'  for  each  of  the  numerous  roads  in  detail,  adapting  the  tariff 
to  the.  situation  and  conditions  existing  upon  each  line.  This  would  be 
a  work  of  such  gigantic  proportions  that  no  single  body  of  men,  no 
matter  how  expert  they  might  be  in  the  work,  could  undertake  it  with 
the  slightest  hopes  of  success.  Yet  something  like  this  would  have  to 
be  attempted  if  the  rate-making  power  were  given  to  a  commission. 

TWO   CLASSES  OF  INTERSTATE   TRAFFfC. 

There  are  two  classes  of  interstate  traffic  over  railroad  lines,  viz: 
Commerce  from  and  to  points  in  the  interior  to  and  from  the  sea  hoard, 
and  commerce  that  crosses  State  lines,  but  is  still  local.  In  the  former 
case  the  great  bulk  of  the  commerce  is  carried  over  great  distances, 
crossing  a  number  of  State  lines,  and  employing  several  connecting 


4  INTERSTATE    COMMERCE. 

roads  to  complete  the  transit.  In  the  other  the  freight  is  carried  from 
a  point  in  one  State  to  a  point  in  an  adjoining  State.  It  is  obvious  that 
rates  adapted  to  the  hauling  of  heavy  and  bulky  products,  comprising 
the  leading  productions  of  the  country,  over  great  distances,  either  for 
eastern  consumption  or  foreign  export,  would  furnish  no  criterion  or 
basis  for  a  system  of  rates  for  the  transportation  of  the  same  prod- 
ucts comparatively  short  distances  between  points  in  adjoining  States 
in  the  interior.  These  products  must  of  necessity  be  moved  at  very  low 
rates,  at  rates  that  do  not  remunerate  the  companies  engaged  in  the 
work  of  transportation,  but  only  furnish  a  small  margin  of  profit  over 
the  bare  expenses  incurred  in  the  performance  of  the  service,  from  the 
fact  that  they  are  moved  very  great  distances.1  The  great  cereal  crops 
raised  in  the  Mississippi  Valley  and  the  meat  products  in  the  trans- 
Mississippi,  in  the  continued  production  of  which  the  country  is  vitally 
interested,  can  only  be  maintained  by  a  system  of  rates  for  their  trans- 
portation to  the  sea-board  which,  while  they  involve  no  absolute  loss 
but  rather  a  small  margin  of  profit,  would,  if  the  same  rates  were  ob- 
ligatory upon  them  as  to  all  traffic  carried  over  their  lines,  consign 
every  road  engaged  in  the  business  into  absolute  bankruptcy. 

It  is  a  fact,  known  to  every  man  who  has  given  any  thought  to  the 
subject,  that  the  rates  now  prevailing  upon  that  part  of  interstate  com- 
merce which  is  concerned  with  the  movement  of  Western  products  to 
the  Eastern  sea-board  are  very  much  lower  than  were  ever  before  de- 
vised by  any  railroad  in  the  world;  so  low  in  fact  that,  were  rates  on 
their  local  traffic  proportioned  or  adjusted  to  these  transcontinental 
rates,  there  is  no  road  now  in  existence  in  this  country  that  could  derive 
sufficient  revenue  from  its  business  to  pay,  in  addition  to  its  operating 
expenses,  its  fixed  charges. 

THE  TWO  ALTERNATIVES. 

To  devise  a  system  of  maximum  rates,  covering  every  species  of  in- 
terstate traffic,  on  the  basis  of  rates  for  long  hauls  from  the  extreme 
West  to  the  East,  would  paralyze  every  railroad  engaged  in  the  business. 
On  the  other  hand,  to  equalize  the  rates  as  between  long  and  short  hauls, 
t.  e.,  to  introduce  a  proportionate  equality  in  the  rates  between  local  and 
continental  interstate  traffic,  would,  if  railroad  property  is  to  be  pre- 
served and  its  efficiency  maintained,  advance  the  rates  on  great  dis- 
tances to  such  an  extent  as  to  put  an  embargo  upon  the  movement  of 
the  cereal  crops  of  the  extreme  West,  or  the  trans  Mississippi  region,  a 
result  which  would  be  little  less  disastrous  to  the  East  than  to  the  West. 

It  has  been  rendered  possible  for  the  great  West  to  reach  a  rapid  and 
prosperous  development,  by  a  system  of  low  rates  upon  the  movement 
of  the  leading  production  of  that  region  to  tide  water.  The  attractions 
of  the  West,  enhanced  and  made  available  by  the  unparalleled  creation 
of  railroad  facilities,  have  induced  a  movement  of  population  from  the 
East  to  the  West,  thus  relieving  an  overburdened  labor  market,  and  re- 
ducing those  causes  of  discontent  and  restlessness  among  the  employed 
laborers  of  the  country  that  eventuate  in  serious  disturbances  to  her 
established  industries,  and  frequently  threaten  the  public  peace. 

On  the  other  hand  the  abundant  production  of  food,  by  the  utiliza 
tiou  of  the  western  lands,  and  its  cheap  distribution  by  railway  lines 
to  remote  distances,  lighten  the  burdens  of  the  laborer  and  increase 
the  ability  of  the  country  to  carry  on  its  industrial  development. 

It  will  be  seen  that  the  benefits  derived  from  the  low  system  of  rates 
prevailing  on  the  great  movements  of  food  products,  as  compared  with 


INTERSTATE    COMMERCE.  5 

rates  upoo  movements  more  local  in  character,  are  shared  by  each  sec- 
tion of  the  country.  And  since  these  benefits  are  felt  alike  in  every 
part  of  the  country  it  is  no  unjust  discrimination  to  discriminate  in  the 
charges  made  upon  long  and  short  hauls. 

It  may  be  further  remarked  that  this  differentiation  in  rates  is  a  re- 
sult that  has  been  brought  about  by  no  conventional  or  voluntary 
arrangement  between  companies  operating  interstate  lines  of  railway. 
But  it  has  been  forced  by  the  natural  laws  of  commerce  operating  upon 
geographical  -lines,  and  which  cannot  be  changed  without  changing  the 
distribution  of  laud  and  water  on  the  continent,  or  by  annihilating  dis- 
tance without  the  aid  of  steam;  and  any  attempt  by  the  law-making 
power  to  contravene  these  natural  laws,  thus  necessitated  by  our  geo- 
graphical situation,  would  end  in  disastrous  derangement  of  our  com 
mercial  system. 

It  would  draw  out  this  paper  to  an  undue  and  tedious  length  to  point 
out  in  detail  the  evil  consequences  which  would  attend  an  attempt  to 
force  upon  the  carrying  business  of  the  country  a  system  of  maximum 
uniform  rates  applying  to  interstate  traffic.  It  would  appear  to  be 
sufficient  to  say  such  a  scheme  would  be  utterly  impracticable.  The 
reasons  already  stated,  we  think,  render  this  obvious,  but  others  might 
be  given,  as,  tor  example,  that  a  system  of  rates  for  interstate  traffic 
over  trunk  lines  operating  between  great  commercial  centers  like  New 
York  and  Chicago,  where  the  volume  of  traffic  has  reached  a  maximum 
limit,  and  the  most  economical  terminal  facilities  have  been  provided 
for  the  cheap  and  expeditious  handling  of  freights,  would  be  unadapted 
'to  roads  farther  west  whose  traffic  was  of  less  volume,  whose  hauls 
were  shorter,  and  whose  terminal  facilities  were  inferior.  The  imprac- 
ticability, then,  of  establishing  a  system  of  uniform  maximum  rates  to 
apply  to  all  interstate  commerce  would  necessitate,  if  the  power  to 
make  rates  was  conferred  upon  a  national  commission,  the  making  of 
differential  rates  substantially  conforming  to  those  systems  now  in  ex- 
istence, and  this  would  involve  the  minute  study  of  so  vast  a  variety  of 
interests,  the  adjustment  of  so  many  conflicting  rights,  and  such  an  in- 
finitude of  detail  as  to  render  such  a  project  chimerical. 

The  rapid  decline  in  rates  within  the  past  five  years,  especially  those 
pertaining  to  interstate  traffic,  carried  on  over  the  leading  lines  of  the 
country,  coupled  with  the  fact  that  the  causes  which  have  brought 
about  the  reductions  are  still  operating  with  undiminished  energy, 
would  seem  to  obviate  any  necessity  of  conferring  upon  a  national  rail- 
road commission  the  rate-making  power.  The  rapid  development  of 
immense  wheat  areas  in  India  and  Australia,  and  cheap  ocean  trans- 
portation, from  these  new  sources  of  supply  to  common  points  of  con- 
sumption of  the  surplus  of  wheat-producing  regions,  supply  additional 
factors  of  competition  to  those  already  existing. 

THE  FUNCTIONS   OF  A  COMMISSION. 

While  the  power  to  establish  maximum  rates  to  govern  interstate 
traffic  could  not,  as  we  believe,  be  wisely  or  usefully  employed  by  a 
national  railroad  commission,  such  a  body  might  usefully  exercise  the 
function  of  entertaining  complaints  from  shippers  of  undue  or  unreason- 
able charges  on  the  part  of  railroad  companies,  and  judge  as  to  the 
reasonableness  or  otherwise  of  the  charges  complained  of.  In  this 
way  &prima  facie  case  might  be  made  for  the  courts. 

Whether  or  not  any  given  rate  or  charge  for  a  specific  service  is  a 
reasonable  charge  is  frequently  a  question  depending  upon  a  great  va- 


6  INTERSTATE    COMMERCE. 

riety  of  facts,  many  of  which  are  not  readily  accessible,  and  the  perti- 
nency and  value  of  which  can  only  be  adequately  judged  by  experts, 
so  that  if  the  shipper  is  left  alone  to  pursue  his  ordinary  remedy  at 
law,  without  the  preliminary  aid  which  a  commission  may  afford  to  him. 
the  remedy  in  most  cases  is  impracticable  and  valueless.  Complaints 
of  alleged  extortion  and  of  unjust  discriminations  might  be  investigated 
in  like  manner,  and  where  evils  of  the  classes  named  were  found  to  ex- 
ist, and  remained  unconnected  in  accordance  with  the  judgment  of  the 
commission,  an  adequate  and  appropriate  remedy  could  be  invoked 
through  the  courts,  the  remedy  being  greatly  facilitated  and  rendered 
practicable  by  the  previous  investigation  of  the  commission.  Nearly 
all  causes  of  complaint  on  the  part  of  shippers,  arising  in  the  busi 
ness  of  transportation,  except  those  wherein  unliquidated  damages  are 
involved,  might  usefully  be  committed  to  the  investigation  and  correc- 
tion of  such  a  commission,  and  we  feel  safe  in  expressing  the  opinion, 
based  upon  the  experience  of  State  commissions,  that  cases  would  sel- 
dom arise  in  which  coercive  power  would  have  to  be  invoked  to  make 
the  correction  effectual. 

UNIFORMITY  AND  STABILITY  OF  RATES. 

There  is  one  other  question  embraced  in  the'  circular  that  we  will 
touch  upon,  but  rather  by  way  of  suggestion  than  argument,  viz  :  The 
importance  of  maintaining  uniformity  and  stability  in  rates.  We  have 
already  pointed  out  the  unpracticability  and  the  undesirability  of  es- 
tablishing uniform  rates,  or  rates  proportioned  to  the  number  of  miles' 
hauled  of  any  given  product,  covering  every  species  of  interstate  traffic. 
But  this  reasoning  will  not  apply  to  rates  for  the  transportation  of 
freight  between  two  given  points — between  Chicago  and  New  York, 
for  example. 

The  maintenance  of  uniform  and  stable  rates  upon  all  the  leading- 
mercantile  products  moved  to  and  from  common  commercial  centers  is 
a  matter  that  deeply  concerns  the  public  as  well  as  the  railroad  com- 
panies engaged  in  the  carrying  of  those  products.  These  evils  are 
greatly  aggravated  where  the  rates  are  not  required  to  be  open  and 
public.  It  is  plain  that  where  such  a  state  of  things  exists  a  portion  of 
the  commercial  community  obtain  secret  advantages  over  the  rest. 
Their  business  is  placed  upon  a  more  easy  and  lucrative  basis.  They 
are  enabled  by  this  means  in  periods  of  sharp  competition  to  undersell 
their  less  favored  competitors,  or,  when  the  rates  rapidly  fluctuate,  as 
is  generally  the  case  where  instability  is  the  rule,  and  the  temporary 
reduction  fails  to  affect  the  price  of  the  article,  the  profits  of  the  more 
favored  class  of  tradesmen  are  unduly  swollen.  Indeed,  in  periods 
when  rates  are  unstable  the  benefits  of  temporary  reductions  are  sel- 
dom shared  with  the  consumer,  but  they  are  so  much  added  to  the 
profits  of  the  middle-man. 

Another  evil  growing  out  of  this  element  of  instability  is  the  tempta- 
tion which  ?•»  offered  to  merchants  to  take  undue  advantage  of  temporary 
reductions  to  overstock  themselves,  frequently  involving  themselves  in 
the  toils  of  embarrassment.  This  is  the  source  of  perhaps  the  worst 
forms  of  unjust  discrimination  and  introduces  into  legitimate  business 
the  element  of  gambling. 

Besides,  what  are  called  rate  wars  among  railroads  are  not  under 
taken  with  any  view  of  subserving  any  public  good,  and  whatever  ot 
temporary  benefit  they  may  bring  to  a  few  is  more  than  offset  by  the 
injustice  and  wrong  done  to  the  rest  and  the  disturbances  they  entail 


INTERSTATE    COMMERCE.  7 

upon  legitimate  business.  But  the  main  object  is  to  disable  competitors 
from  engaging  in  fair  competition  for  a  share  of  the  business  which  a 
few  seek  to  grasp,  the  ultimate  object  being,  not  to  bring  about  perma- 
nent reductions  in  rates,  but  to  fasten  themselves  more  securely  on  the 
country  as  an  unchecked  monopoly. 

Railroads  engaged  in  interstate  commerce  are  employed  also  in  local 
traffic.  The  communities  which  they  immediately  serve  cannot  dis- 
pense with  them.  They  must  have  a  source  of  maintenance  or  cease  to 
exist,  or  exist  with  a  greatly  impaired  usefulness  and  efficiency.  Inso- 
much as  their  legitimate  support  is  wasted  in  destructive  rate  wars,  a 
higher  standard  of  local  rates  must  prevail,  necessarily.  Either  this 
alternative  must  be  accepted,  or.  what  is  worse,  the  destruction  of  the 
efficiency  of  the  road.  It  is  easy  to  perceive  that  this  state  of  things 
gives  rise  to  grievous  complaints  by  local  shippers  of  excessive  charges 
and  unjust  discriminations. 

VVhiie  it  is  true  that  a  very  considerable  disparity  must  of  necessity 
exist  between  rates  for  local  hauls  and  those  for  transcontinental  traffic 
upon  the  food  products  of  the  country,  for  the  reason  that  these,  to  con- 
tinue to  be  produced  at  a  living  profit,  can  bear  but  a  limited  trans- 
portation charge,  no  matter  how  great  the  distance  hauled,  yet  the 
difference  should  not  be  so  great  as  to  give  rise  to  just  complaints  of 
unjust  discrimination.  It  is  probably  not  within  the  competence  of 
legislation  to  wholly  eliminate  from  the  business  of  transportation  all 
the  evils  that  are  incident  to  it  or  grow  out  of  it.  But  that  they  may 
be  checked  and  mitigated  by  wholesome  provisions  and  vigilant  admin- 
istration it  may  with  reason  be  assumed. 

The  business  of  a  common  carrier  concerns  the  whole  public,  and  it 
is  in  the  nature  of  a  public  function.  All  rates  should  be  required  to 
be  made  public.  The  granting  of  secret  rebates  or  drawbacks,  or  other 
advantages  to  one  shipper  or  a  particular  class  of  shippers  over  others 
similarly  situated,  should  be  prohibited  under  penalties. 

THE   LEGALIZING   OF   TRAFFIC  AGREEMENTS. 

Since  the  violent  fluctuations  of  rates,  consequent  on  rate  wars  be- 
tween rival  lines,  result,  usually,  in  discriminative  benefits  to  a  few  at 
the  ultimate  expense  of  the  public,  means  should  be  taken  to  at  least 
moderate  this  disturbing  element  to  the  business  interests  of  the  coun- 
try. As  a  means  to  this  end,  we  venture  to  suggest  that  contracts  or 
agreements  between  rival  companies  to  carry  on  interstate  traffic  upon 
given  rates,  providing  those  rates  are  reasonable  and  just,  should  be 
invested  with  a  legal  status  and  be  enforceable  with  appropriate  sanc- 
tions. Such  agreements  should  in  all  cases  be  first  submitted  to  a  com- 
mission established  by  Congress,  whose  judgment  as  to  the  reasonable- 
ness of  the  rates  agreed  upon  should  be  requisite  to  give  such  agree- 
nii'iit  validity.  By  this  means  the  public  would  be  guaranteed  against 
unreasonable  or  excessive  rates  upon  interstate  commerce  and  the 
railroad  companies  be  afforded  some  protection  against  practical  pro- 
ceedings amongst  themselves  and  against  each  other.  This  suggestion 
is  made  upon  the  assumption  that  for  a  service  rendered  a  railroad 
company  is  entitled  to  a  fair  and  reasonable  remuneration,  and  that  it 
is  neither  fair  nor  good  policy  to  ask  that  it  be  done  for  less.  Upon 
this  basis,  and  with  proper  guarantee  that  this  condition  be  secured,  it 
is  difficult  to  conceive  what  fundamental  objection  could  exist  to  the 
enforcement  of  this  character  of  contract. 


8  INTERSTATE    COMMERCE. 

ARBITRATION   BETWEEN   RAILROADS    AND    THEIR   EMPLOYES. 

We  venture  to  refer  to  another  matter,  though  it  is  not  embraced  in 
your  circular.  The  organized  combinations  among  the  various  classes 
of  railroad  employes,  through  which  claims  are  made  upon  the  compa- 
nies and  compliance  with  these  demands  coerced  by  strikes,  entailing 
serious  losses  both  on  companies  and  the  public  by  arresting  the  opera- 
tion of  railways  affected,  give  promise  of  greater  trouble  in  the  future 
unless  some  method  can  be  devised  to  settle  disputed  claims  without 
resort  to  strikes.  Some  of  the  organizations  have  adopted  rules  which 
hamper  and  interfere  with  the  company's  right  to  manage  it  sown  prop- 
erty and  business.  They  assume  for  these  organizations  the  right  to 
sit  in  judgment  upon  and  revise  and  reverse  the  action  of  the  manager 
or  other  executive  head  appointed  by  owners  of  the  property  in  mat- 
ters pertaining  to  the  employment  and  pay  of  employe's.  In  thus  de- 
nying the  right  to  the  company  .of  freedom  of  contract,  these  organiza- 
tions, so  far  as  they  are  concerned  or  affected,  assume  a  joint  manage- 
ment of  the  business  in  their  tfwn  interests.  While  companies  may, 
for  the  time,  yield  to  superior  force  embodied  in  these  organizations, 
they  cannot  recognize  the  claims  or  assumptions  on  the  part  of  their 
employes  as  valid. 

On  the  other  hand,  workingmen  feel  that  so  long  as  they  remain  faith- 
ful and  efficient  in  the  line  of  their  employment  they  ought  to  be  able 
to  feel  secure  in  the  permanency  of  such  employment ;  that  when  liable 
to  be  discharged,  either  for  or  without  cause,  at  the  arbitrary  will  or 
pleasure  of  one  man,  a  man  who  practically  commands  their  means  of 
sustenance,  they,  to  a  certain  extent,  surrendered  their  own  rightful 
freedom. 

The  strikes  that  most  frequently  occur  take  place  upon  interstate 
lines  of  railway,  the  striking  combinations  extending  into  two  or  more 
States.  It  is  submitted  that  to  a  national  railroad  commission  might 
be  entrusted  the  power  to  arbitrate  and  settle  disputes  arising  between 
the  companies  and  their  employes  under  such  legal  regulations  as  might 
be  appropriately  provided,  and  under  which  such  arbitration  should  be 
compulsory. 


JUDGE  COJLEY'S  STATEMENT. 

Letter  to  the  chairman  from  Judge  T.  M.  Cooley,  of  Ann  Arbor,  Mich. 

Your  letter  to  me  respecting  the  questions  which  your  committee  has 
under  consideration  finds  me  with  my  time  so  completely  engrossed 
with  engagements  which  cannot  be  put  aside  that  it  is  quite  out  of  my 
power  to  do  more  in  reply  than  to  touch  hastily  upon  a  few  topics. 

The  general  subject,  when  broadly  considered,  is  perhaps  as  import- 
ant as  any  now  before  the  American  people.  An  immense  aggregate 
of  capital  has  been  invested  in  railroads,  ostensibly  for  the  benefit  of 
the  public  on  the  one  side  and  of  the  investors  on  the  other.'  A  very 
large  proportion  of  this  capital  is  now  found  to  be  unremuuerative,  and 
so  far  as  the  investors  are  concerned  is  sunk  and  lost.  When  capital 
invested  in  a  useful  business  is  thus  lost,  the  loss  does  not  fall  wholly 
upon  the  owners,  but  the  aggregate  property  of  the  State  is  to  that  ex- 
tent diminished,  and  in  various  ways  the  loss  is  felt  by  the  whole  com- 
munity. But  while  the  investors  have  been  losing  an  impression  has 


INTERSTATE    COMMERCE.  9 

been  growing  and  strengthening  in  many  quarters  tbat  the  public,  be- 
cause of  bad  management,  has  been  deprived  of  much  of  the  benefit 
tliat  was  reasonably  to  be  counted  on,  and  tbat  injurious  combinations 
are  formed  and  monopolies  created  to  the  public  prejudice.  This  im- 
pression, whether  well  founded  or  not,  is  a  serious  evil,  because  it  breeds 
serious  consequences.  Moreover,  railroad  managers,  in  the  minds  of 
large  classes  of  men,  stand  as  the  representatives  of  capital  in  antago- 
nism to  productive  industry ;  and  whatever  tends  to  increase  the  hos- 
tility to  railroad  managements  tends  also,  in  some  degree,  to  strengthen 
a  troublesome,  if  not  dangerous,  feeling  of  antagonism  to  acquired 
wealth. 

DIFFICULTIES  IN   THE   WAY   OF  WISE   LEGISLATION. 

Some  of  the  feeling  against  railroad  management  is  well  founded; 
some  of  it  is  baseless  prejudice.  To  discover  what  is  just  and  what 
unjust  I  suppose  is  one  part  of  your  duty  as  a  committee.  To  devise 
remedies  for  such  evils  as  may  be  found  to  exist,  is  the  other  and  more 
troublesome  part.  It  is  the  more  troublesome  because,  in  the  first 
place,  the  whole  business  of  railroad  management  is  still  new.  Rail- 
roads have  existed  in  the  country  but  fifty  years,  and  in  that  time  the 
aspect  of  what  in  general  terms  we  speak  of  as  the  railroad  problem 
has  been  assuming  from  time  to  time  new. phases ;  so  that  it  has  been 
impossible  for  the  public  mind  to  settle  down  upon  the  best  methods. 
What  was  thought  wise  even  thirty  years  ago  is  known  now  to  be  in 
some  respects  absurd;  and  the  very  best  railroad  managers  have  up  to 
this  time  only  been  feeling  their  way  along,  in  the  hope  of  reaching  at 
length  the  true  policy.  In  the  second  place,  the  want  of  popular  in- 
formation on  the  general  subject  is  seriously  in  the  way  of  wise  legisla- 
tion. The  demand  for  regulation  is  to  a  large  extent  inconsistent  with 
itself,  but  the  inconsistency  is  not  apparent,  for  the  simple  reason  that 
the  complications  of  the  subject  are  not  readily  perceived  and  under- 
stood. There  is  a  demand,  for  example,  for  legislation  that  will  secure 
at  ihe  same  time  steadiness  of  rates  and  unrestrained  and  even  active 
competition,  things  which  necessarily  kill  each  other ;  and  those  who 
make  the  demand,  if  compelled  to  choose  between  the  two,  would  be 
almost  certain,  in  the  present  state  of  public  opinion,  to  choose  that 
which  was  least  beneficial.  I  shall  venture  to  say,  also,  that  there  are 
in  the  country  two  distinct  and  very  dissimilar  classes  of  railroad  men, 
one  of  which  would  manage  the  roads  so  as  to  make  them  legitimately 
useful  to  both  the  stockholders  and  the  public,  while  the  other  em- 
braces men  who  find  their  profit  in  the  manipulation  of  stocks,  whether 
at  the  stock  board  or  elsewhere.  The  two  characters  may  of  course  be 
combined  in  the  same  man,  but  the  stock  speculator  is  supposed  to 
carry  into  his  road  management  an  inordinate  and  unscrupulous  greed, 
and  he  stands  in  the  public  mind  as  the  representative  of  all,  and  is 
assumed  to  be  a  man  of  great  wealth,  which,  by  tricks  and  extortion, 
has  been  taken  from  the  pockets  of  the  public,  and  requiring  legisla- 
tion to  hold  him  in  check.  But  it  is  matter  of  public  notoriety  that 
this  second  class  has  thriven  rather  from  the  handling  of  wrecks  than 
of  substantial  properties,  and  that  their  business  has  largely  consisted 
in  possessing  themselves  of  failing  or  bankrupt  concerns  and  loading 
them  by  consolidation  or  otherwise  upon  better  enterprises,  to  the  ruin, 
in  many  cases,  of  those  thus  loaded.  But  the  man  who  finds  bis  profit 
in  "  systems  into  ruin  hurled,"  where  the  stockholder  and  the  public 
are  alike  sufferers,  may  feel  little  or  no  interest  in  better  management 
than  now  exists. 


10  INTERSTATE    COMMERCE. 

WISE  LEGISLATION  MUST  BE   CAUTIOUS  LEGISLATION. 

These  are  some  of  tbe  difficulties  in  the  way  of  wise  legislation,  and 
they  are  so  serious  that  no  one  can  afford  to  overlook  or  disregard 
them.  Lack  of  sufficient  experience;  lack  of  general  information; 
prejudice,  to  some  extent  well  founded  and  very  inveterate :  what 
impediments  to  safe  legislation  could  be  more  serious  than  these? 
The  danger  is  more  imminent  that  if  legislation  were  to  be  adopted 
which  should  be  intended  to  be  comprehensive  and  final,  it  would  be 
over-legislation,  and  perhaps  introduce  more  evils  than  it  would  cure. 
Useful  legislation  at  this  time,  when  so  many  who  must  participate  in 
it  have  given  the  subject  no  study  whatever,  and  when  even  the  wisest 
have  doubts  on  many  points,  must,  necessarily,  be  cautious  legislation. 
A  priori  reasoning,  not  yet  tested  by  experience,  is  perhaps  as  likely 
to  prove  erroneous  if  given  effect  by  legislation  now  as  it  would  have 
been  a  quarter  of  a  century  ago.  And  we  know  that  such  a  solving  by 
legislation  as  the  railroad  problem  could  have  had  at  that  time  would 
long  before  this  have  come  to  be  justly  regarded  as  in  the  higest  de- 
gree oppression.  Railroad  projectors  and  managers  were  then  the  pub- 
lic favorites,  and  the  people  were  ready  to  let  them  shape  the  laws  to  suit 
themselves.  Unreasoning  antaganis  now  may  be  no  further  wrong 
than  unreasoning  confidence  then,  but  permanent  legislation  that  shall 
be  meant  for  a  finality  can  spring  neither  from  the  otie  nor  the  other. 
Every  year  more  knowledge  is  being  acquired  respecting  the  natural 
laws  which  affect  transportation,  and  if  legislation  proceeds  cautiously 
we  shall  no  doubt  after  a  time  have  a  system  which  best  and  most  use- 
fully harmonizes  with  those  natural  laws. 

RATES  MAY  BE  OPPRESSIVE,  EVEN  WHEN  TOO  LOW. 

Among  the  complaints  most  often  made  by  the  public  is  one  of  ex*- 
orbitant  rates.  That  as  a  rule  the  rates  are  not  too  high  would  seem 
evident  from  the  fact  that  they  do  not  enable  a  majority  of  the  roads 
to  pay  dividends.  Nevertheless,  as  the  rates  are  adjusted  and  imposed 
they  have  in  a  great  many  cases  the  effect  of  excessive  rates,  and  the 
complaints  made  against  them  are  well  founded.  And  this  is  one  of 
the  anomalies  of  railroad  business,  that  rates  may  be  oppressive  even 
when  too  low. 

I  have  occasion  to  procure  a  certain  article  of  manufacture  made  a 
hundred  miles  away.  I  order  it,  and  it  is  delivered  to  me  at  a  cost  for 
railroad  transportation  no  greater  than  the  drayman  charges  for  taking 
it  from  the  statioR  to  my  house.  It  seems  a  marvel  of  cheapness,  and 
when  I  reflect  that  the  charges  for  railroad  service  have  been  steadily 
going  down  for  many  years,  the  first  impression  naturally  is  that  a  very 
satisfactory  condition  of  things  exists  in  this  regard. 

On  meeting  with  the  manufacturer,  however,  I  find  that  the  condi- 
tion of  things  is  far  from  being  satisfactory  to  him.  On  the  contrary 
even  these  low  rates  may  be  ruinous.  In  the  first  place  there  is  no 
stability  to  them.  The  manufacture  is  one  in  which  competition  is  very 
sharp,  and  the  margin  for  profits  is  so  small  that  a  difference  in  the 
railroad  rates,  such  as  is  made  in  some  of  the  changes,  might  exhaust  it. 
Without  stability  there  is  a  want  of  the  requisite  certainty  for  the  mak- 
ing of  contracts.  But  what  is  perhaps  worse  is  that  a  rival  competes 
for  the  supply  of  the  same  territory,  and  though  the  roads  which  carry 
the  goods  of  the  two  respectively  charge  nominally  the  same  rates,  he 
finds  as  matter  of  faqt  that  the  rival  obtains  concessions  which  are 
sufficient  to  enable  him  to  control  the  market. 


INTERSTATE    COMMERCE.  11 

If  the  complaint  is  well  founded  there  is  a  serious  wrong  which  may 
demand  legislation.  The  evil  springs  from  a  want  of  steadiness  in  rates, 
and  from  the  secret  cutting  of  rates. '  The  latter  is  necessarily  incident 
to  a  state  of  unrestricted  competition,  and  many  persons  are  impressed 
that  somehow  the  public  is  benefited  every  time  the  rates  are  put  down, 
whether  secretly  or  publicly,  and  that  legislation  ought  to  be  so  shaped 
as  to  favor  rather  than  check  unrestricted  cutting.  But  a  policy  that 
is  injurious  to  business  interests  is  necessarily  injurious  to  the  public; 
the  damaging  consequences  distribute  themselves  through  the  whole 
community  even  when  we  are  not  able  to  trace  them.  This  is  coming  to 
be  more  generally  understood  than  formerly,  and  though  by  no  means 
universally  accepted  as  a  truth  in  political  economy,  yet  more  and  more 
every  year  it  is  perceived  that  there  is  a  desirability  in  steadiness  of 
rates,  which  may  often  be  greater  even  than  very  low  rates. 

THE  PUBLICATION  OF  BATES. 

Railroad  managers  have  themselves  endeavored  to  secure  that  object 
by  their  joint  arrangements,  but  their  contracts  are  without  legal  force, 
and  the  temptations  to  break  away  from  them  are  so  numerous  and 
operate  upon  so  many  persons  and  so  continuously  that  the  results  are 
very  unsatisfactory.  But  it  is  thought  by  many  that  a  complete  remedy 
could  be  found  in  legislation  that  should  require  rates  to  be  made  pub- 
ic, and  adhered  to  for  a  definite  time  without  change,  under  penalty, 
and  that  should  at  the  same  time  prohibit  the  common  understandings 
that  the  railroads  now  endeavor  to  harmonize  upon. 

The  prohibition  would  necessarily  destroy  the  remedy;  that  is  to 
say,  the  attempt  at  such  a  remedy  would  be  more  mischievous  than, 
beneficial,  unless  it  had  for  its  basis  a  general  predetermination  of 
the  rates.  Such  most  certainly  would  be  the  case  as  to  all  the  business 
in  respect  to  which  rates  are  now  so  unsteady  as  to  make  legislation 
important ;  that,  namely,  in  respect  to  which  there  is  competition,  which 
of  course  is  the  major  part  of  all.  As  to  such  business  the  road  that 
could  manage  to  fix  the  rates  last  would  have  a  monopoly  for  the  period 
during  which  they  must  remain  unchanged,  and  sharp  management  to 
secure  that  monopoly  would  be  the  most  successful  management.  A 
new  temptation  to  trickery  would  thus  be  introduced,  and  a  far  more 
powerful  one  to  the  cutting  of  rates  than  now  exists,  because,  if  success- 
ful, extraordinary  advantages  would  be  expected  from  it. 

METHODS   OF  ESTABLISHING  BATES. 

Two  remedies  to  secure  fairness  naturally  present  themselves :  One 
that  the  State  fix  all  rates,  and  the  other  that  the  railroad  companies 
agree  upon  them.  If  any  one  should  be  inclined  to  regard  the  first  as 
a  practical  method,  it  would  be  useful  for  him  to  take  the  tariffs  for 
freight  of  the  leading  trunk  lines  and  endeavor  to  so  adjust  them  as  to 
make  charges  which  would  be  fair  as  permanent  charges  at  all  points. 
It  would  probably  surprise  him  to  find  how  complicated  a  problem  he 
had  in  hand,  how  diverse  the  interests,  how  difficult  the  questions  for 
even  the  fairest  mind,  and  at  how  many  points  there  was  opportunity 
for  favoritism  .and  unjust  discrimination,  not  between  railroads  merely, 
but  between  towns  and  sections  of  country.  Nothing  is  hazarded  in 
saying  that  if  the  State  were  to  adopt  this  course  as  a  policy  the  sub- 
ject would  have  complications  hitherto  unknown,  and  that  railroads 
would  be  brought  into  politics  in  a  way  to  make  them  more  trouble- 


12  INTERSTATE    COMMERCE. 

some  than  ever.  Every  road  in  all  its  claims  would  have  a  local  back- 
ing, and  in  many  cases  towns  and  sections  would  seem  to  be  more 
vitally  interested  than  the  roads  themselves.  There  would  be  a  very 
simple  way  of  avoiding  this  complication ;  that,  namely,  of  establishing 
definite  rates  by  mileage. 

But  while  that  mode  would  be  very  simple,  it  would  not  get  rid  of 
difficulty  or  complaint ;  it  would  only  change  their  ground.  Uniform 
rates  by  mileage  would  give  all  competitive  business  to  the  shortest 
line  and  would  practically  annihilate  some  long  and  useful  roads  which 
now  very  successfully  compete  for  business  with  shorter  rivals.  In 
contrast  to  this  would  be  an  agreement  as  to  rates  by  the  roads  them- 
selves, with  legal  sanction  therefor  when  not  manifestly  unjust. 

The  question  then  presents  itself  whether  the  final  solution  for  the 
k<  railroad  problem  "is  not  likely  to  be  found  in  treating  the  railroad 
interest  as  constituting  in  a  certain  sense  a  section  by  itself  of  the  polit- 
ical community  and  then  combining  in  its  management  the  State,  rep- 
resenting the  popular  will  and  general  interests,  with  some  definite, 
recognized  authority  on  the  part  of  those  immediately  concerned,  much 
as  State  and  local  authority  are  now  combined  for  the  government  of 
municipalities.  Something  of  the  sort  would  neither  be  unphilosophical 
nor  out  of  accord  with  the  general  spirit  of  our  institutions,  and  it  is  there- 
fore likely  at  some  time  to  be  taken  into  serious  consideration  by  law- 
makers. If  the  State  reserves  to  itself  the  necessary  authority  to  pro- 
tect the  public  against  unfair  practices,  she  may  well  leave  the  roads  to 
quarrel  over  the  infinite  variety  of  detail  in  the  adjustment  of  rates, 
taking  care,  however,  that  their  adjustment  shall  not  be,  as  it  often  is 
now,  purely  nominal,  but  one  to  be  adhered  to. 

THE  EFFECT   OF  REBATES. 

Should  some  policy  like  that  indicated  ultimately  come  to  be  accepted 
as  wise,  the  popular  authority  would  be  likely  to  insist  upon  a  total  pro- 
hibition of  rebates.  They  are  now  made  use  of  to  some  extent  as  a 
means  of  unfairly  cutting  rates,  which,  I  assume,  would  then,  as  far  as 
possible,  be  prevented.  But  a  more  influential  fact  would  be  the  eifect 
that  customary  rebates  have  on  competition.  Eebates  assume  a  very 
plausible  form  when  they  are  allowed  as  an  inducement  to  the  estab- 
lishment of  a  new  business.  Thus,  a  man  goes  to  a  railroad  manager 
and  says :  "  I  will  establish  a  large  manufactory  at  town  A  on  your  line, 
which  will  benefit  you  and  the  public,  provided  you  offer  the  proper 
inducements.  The  proper  inducements  will  be  a  concession  in  rates 
in  respect  to  the  business  I  thereby  bring  to  you."  The  railroad  man- 
ager assents  to  this ;  the  concession  to  be  made  is  agreed  upon,  and  the 
business  is  established.  The  parties  thus  agree  that  what  they  do, 
while  a  benefit  to  the  railroad  company,  is  also  an  important  public 
benefit.  It  calls  into  existence  a  new  business  that  would  not  other- 
wise have  been  established,  and  tends  to  build  up  and  enrich  the  town 
and  the  country  dependent  upon  it. 

This  seems  plausible,  and  if  the  railroad  manager  were  conducting  a 
business  exclusively  private  in  its  character,  it  might  be  conclusive. 
But  that  is  not  his  position,  and  it  is  necessary  for  him  at  all  times  to 
bear  in  mind  that  be  is  supplying  a  public  convenience,  and  is  under 
obligation  to  do  so  in  such  a  way  that  benefit  to  one  shall  not  be  injury 
to  another.  He  cannot  look  at  the  side  of  benefit  exclusively  and  ignore 
the  other  side.  There  may  be  cases  in  which  such  a  concession  to  a 
new  business  would  wrong  no  one ;  but  they  must  be  very  uncommon. 
Generally  the  concession  is  needed  only  .to  give  the  new  business  an 


INTERSTATE    COMMERCE.  13 

advantage  over  established  rivals,  and  the  benefit  received  is  at  the 
expense  of  others.  It  does  not  follow  that  in  such  a  case  there  is  any 
advantage  to  the  general  public.  The  new  enterprise  calls  no  new 
capital  into  existence ;  it  simply  changes  capital  from  one  thing  to 
another,  and  if  oiie  establishment  is  injured  by  the  granting  of  impor- 
tant special  favors  to  another,  the  harm  may  fully  neutralize  the  advan- 
tages. 

But  more  generally  rebates  are  an  allowance  in  consideration  of  ex- 
ceptionally large  amounts  of  business.  Here  the  argument  for  the 
allowance  is  the  same  that  prevails  in  other  business,  the  customer  re- 
ceives favors  measured  by  the  extent  of  the  business  he  brings,  and 
this  is  supposed  to  be  justified  by  the  advantages  received  from  him, 
and  also  by  the  fact  that  the  cost  and  trouble  of  handling  freight  is 
relatively  less  when  the  amount  is  large.  But  here  we  have  again,  as 
the  practical  effect,  that  with  the  assistance  of  the  road  one  dealer  is 
built  up  at  the  expense  of  others.  But  in  consideration  of  the  larger 
amount  of  business  the  large  customer  is  likely  to  obtain  other  advan- 
tages also;  a  side  track,  for  example,  which  saves  him  the  cost  of  cartage. 
The  steady  tendency  of  these  advantages  to  build  him  up  at  the  cost 
of  weaker  concerns  is  inevitable,  and  the  effect  may  be  conclusive. 
Indeed,  it  is  not  impossible,  in  some  lines  of  business,  for  some  single 
establishment  to  crush  out  all  competition  and  establish  a  complete 
monopoly.  It  may  be  said,  and  is  sometimes  said,  that  this  would  be 
beneficial ;  that  the  public  would  be  better  served,  production  would  be 
less  expensive,  and  prices  lower.  It  may  be  so  ;  but  I  do  not  subscribe 
to  the  doctrine  that  the  public  is  necessarily  benefited  when  prices  are 
put  down  ;  to  assume  that  is  to  take  a  partial  view,  without  considering 
the  incidental  consequences.  There  are  several  considerations  involved 
which  are  of  no  small  importance,  and  one  of  these  concerns  the  effect 
upon  the  imaginations  of  men  of  seeing  large  establishments  thus  re- 
morselessly crushing  out  the  smaller  by  the  mere  force  of  advantages 
derived  from  a  public  convenience  which  has  been  nominally  called  into 
existence  for  the  common  and  equal  benefit  of  all.  It  is  a  great  public 
calamity  when  people  in  a  free  country  are  brought  to  believe  that  the 
tendency  of  public  institutions  is  to  make  the  strong  stronger  and  the 
weak  weaker.  Other  things,  they  think,  have  a  sufficient  tendency  in 
that  direction  without  any  aid  from  Government,  or  the  institutions  the 
Government  may  control. 

In  my  patronage  of  the  post-office  I  find  the  general  rule  to  be  that 
there  shall  be  uniformity  of  charges,  regardless  of  the  extent  of  business 
of  customers.  A  hundred  persons  who  receive  little  mail  may  each 
cause  the  postmaster  as  much  labor  as  the  one  who  receives  and  sends 
as  much  mail  as  they  all;  but  nevertheless  the  officer  is  not  permitted 
to  make  any  charge  for  the  additional  labor.  Nobody  complains  of  this ; 
it  is  undoubtedly  best  it  should  be  so.  The  Government  appoints  ad- 
ditional clerks  without  complaint,  and  the  postmaster  performs,  as  of 
course,  the  additional  labor  imposed  upon  himself. 

The  analogy  between  his  case  and  that  of  the  railroad  manager  is  not 
perfect ;  but  with  the  principle  established  that  the  railroad  is  to  be 
held  in  law  a  public  convenience,  it  must  be  expected  that  in  legislation 
it  will  be  treated  much  as  those  are  which  are  supplied  exclusively  by 
the  State.  It  does  not  follow  that  it  will  be  prejudicial  to  the  roads. 
If  it  results  in  better  relations  between  them  and  the  public  than  could 
otherwise  exist  there  will  be  a  positive  gain  ;  and  if  the  roads  are  not 
unfairly  treated  in  any  legislation  respecting  rates  their  compensation 
may  in  the  aggregate  be  equally  good,  though  differently  distributed. 


14  INTERSTATE    COMMERCE. 

GENERAL   CONCLUSIONS. 

What  I  have  already  said  sufficiently  indicates  my  opinion  that  in  the 
matter  of  rates  and  running  arrangements  the  railroad  companies  must 
take  the  initiative.  Legislation  will  then  be  needed  to  compel  them  to 
observe  their  contracts.  But  the  difficulties  inherent  in  the  subject 
will  even  then  disappear  only  gradually  and  slowly.  If  the  roads  had 
unlimited  power  to-day  to  fix  rates  and  make  running  arrangements 
they  would  not  all  agree  in  doing  so.  So  long  as  we  have  bankrupt 
roads  we  shall  always  have  roads  to  compete  recklessly,  and  plenty 
of  bankrupt  roads  we  shall  continue  to  have  so  long  as  schemers  may 
build  roads  anywhere,  regardless  of  the  need  of  them.  If  one  or  more 
roads  for  any  reason  refused  to  concur  in  fair  rates,  and  expected 
through  strategy  to  find  a  profit  in  the  refusal,  it. would  be  necessary 
in  the  interest  of  fairness  to  provide  against  the  others  being  so  tied  up 
to  rigid  rules  as  to  be  at  their  mercy. 

Some  of  the  problems  suggested  by  your  circular  are  such  as  Con- 
gress cannot  solve,  because  they  concern  local  traffic,  and  must  be  dealt 
with  by  the  States.  In  some  localities  serious  wrong  is  done  by  impos- 
ing unfair  burdens  upon  local  freights ;  but  Congress  could  give  no  re- 
dress unless  indirectly,  and  what  it  could  do  indirectly  would  only  be 
in  the  direction  of  relieving  local  freights  by  imposing  a  larger  share  of 
the  burden  of  carriage  upon  freights  carried  for  long  distances.  But 
any  attempt  in  that  direction  would  be  likely  to  prove  abortive,  because 
the  people  of  the  larger  part  of  the  country  would  think  it  prejudicial 
to  their  interests.  Conjoint  Federal  and  State  legislation  would  be  es- 
sential, and  I  know  of  no  reason  for  believing  it  could  be  obtained. 
The  railroad  problem  would  be  much  more  simple  than  it  is  if  the  inter- 
ests of  all  sections  of  the  country  were  identical,  and  if  the  power  of 
control  was  vested  in  a  single  body.  As  it  is,  if  a  man  were  ever  so 
wise  he  might  in  some  cases  be  powerless  for  good,  for  he  might  find 
that  the  effective  means  of  redress  were  in  the  hands  either  of  parties 
who  lacked  the  competency  to  legislate  wisely  or  were  interested  against 
legislating  effectively  to  reach  the  real  evils. 


THE  KENTUCKY  COMMISSION. 

Statement  by  J.   P.    Thompson,  chairman  of  the  railroad  commission  of 

Kentucky. 

I  think  the  law-making  power  ought  to  interfere  with  transportation  as 
little  as  possible.  Irregularities  and  inequalities  of  trade  and  commerce 
are  best  regulated  by  time  and  experience.  I  think  there  has  been,  and 
will  continue  to  be,  gradual  improvement  in  facilities  and  rates  of  trans- 
portation. The  best  plan  I  can  suggest  is  a  national  commission,  coin- 
posed  of  men  of  broad,  liberal  views,  who  will  be  impartial  toward  the 
transportation  interest  as  well  as  the  shipping  interest.  The  commission 
ought  to  be  clothed  with  advisory  powers  only.  Thechief  reliance  ought 
to  be  in  public  opinion.  That  is  the  great  regulator  after  all.  My  exper- 
ience is  that  railroads  and  transportation  companies  have  great  respect 
for  the  public,  and  are  very  anxious  to  appear  just.  Annual  reports  made 
by  the  commissioners  to  the  President  would  exhibit  the  conditions  and 
working-sol'  ilu-  various  lines  engaged  iuinterstate  commerce;  every  com- 


INTERSTATE    COMMERCE.  15 

pany  would  strive  to  merit  and  receive  a  favorable  notice  in  the  com- 
missioners' report.  A  law,  very  broad  and  general  in  its  terms,  against 
extortion  and  unjust  discrimination  ought  to  be  enacted.  Violations  of 
this  law  ought  to  be  prosecuted  by  the  commissioners.  The  variations 
in  rates  of  transportation  are  so  great  that  no  general  law  can  be  en- 
acted fixing  minimum  and  maximum  rates  that ( would  be  effective  or 
just.  A  law  \vith  no  one  charged  specially  to  see' to  its  execution  would 
be  almost  a  dead  letter.  Everybody's  business  is  nobody's  business. 
The  railroad  commissioners  would  be  constantly  watching  the  trans- 
portation interest.  They  would  constitute  a  tribunal  to  which  the  trans- 
portation companies  could  appeal  to  settle  differences  among  them- 
selves, and  to  which  the  people  could  appeal  without  cost  or  expense. 
Uniformity  of  rate^ou  all  the  railroads  in  the  country  would  be  mani- 
festly unjust.  A  road  the  construction  of  which  cost  from  $50,000  to 
$100,000  per  mile,  one  that  traverses  mountains  and  large  streams,  is 
entitled  to  receive  more  per  ton  per  mile  than  another  road  that  does 
the  same  amount  of  business  which  cost  $15,000  per  mile.  No  general 
law  fixing  rates  would  be  just.  1  had  hoped  that  your  committee  would 
call  a  meeting  of  the  various  railroad  commissioners  and  the  represent- 
atives ot  the  transportation  companies,  and  have  an  interchange  of 
views,  which  would  certainly  have  proven  mutually  advantageous. 


JOHN  D.  KERNAN'S  STATEMENT. 

Supplementary  statement  by  John  D.  Eernan,  chairman  of  the  New  York 
railroad  commission  (see  testimony,  p.  3),  with  draft  of  proposed  MIL 

When  I  had  the  honor  of  appearing  before  your  honorable  body  in 
May  last,  it  ivas  without  opportunity  for  such  preparation  and  thought 
as  the  importance  of  the  subject  deserved.  I  therefore  avail  myself  of 
your  kind  invitation  to  further  answer  the  inquiries  proposed  in  your 
circular,  dated  April  10,  1885,  which  are  these: 

[Here  follow  the  interrogatories  elsewhere  printed.] 
The  railroad  answer  to  these  questions  is  that  to-day  interstate  or 
through  commerce  rates  are  too  low,  and  that  the  consequent  destruc- 
tion of  railroad  investments  threatens  the  efficiency  of  transportation 
service  and  indirectly  injures  general  business  prosperity;  that  there  is 
substantially  no  extortion  or  unjust  discrimination  to  be  prevented; 
that  the  sole  duty  on  the  part  of  the  Government  calling  for  its  action 
and  -legislation  is  such  as  will  raise  and  maintain  through  rates  to  a 
reasonably  fair  basis;  that  when  so  raised  and  maintained,  inequalities 
and  apparent  unjust  discrimination  will  disappear,  and  railroads,  under 
the  corrective  influences  of  public  opinion,  water,  and  other  healthful 
competition,  will  of  themselves  properly  adjust  the  relations  of  through 
and  local  tariffs,  and  that  the  management  of  railroads  will  impartially 
discharge  the  duty  of  arbitration  between  the  railroad  owner  and  in- 
\ ester  and  the  public;  that  the  present  "pooling"  system  is  skillfully 
devised  to  maintain  just  and  reasonable  rates  and  to  prevent  unjust 
discrimination,  extortion,  secret  rebates,  &c. ;  that  its  legalisation  is  at 
present  the  shortest  practicable  road  to  the  end  sought  by  Congress ; 
that  the  common  law  and  its  remedies  afford  all  the  redress  needed 
by  the  shipper  to  protect  himself  against  arbitrary  and  unreasonable 
rates,  rules,  conditions,  &c. ;  that  the  limit  of  legislation  by  Congress 


16  INTERSTATE    COMMERCE. 

in  tbe  public  interest  ought  to  be  the  establishment  of  a  commission  to 
acquire  and  disseminate  information,  to  act  as  an  advisory  board  only, 
and  to  suggest  from  time  to  time  additional  legislation. 

The  facts  stated  are  contradicted  on  behalf  of  the  public  to  a  greater 
or  less  extent,  more  particularly  at  the  vast  number  of  non-competitive 
points  in  the  country.  The  theory  underlying  the  railroad  answer  to 
this  question  is,  that  railroads  should  be  permitted,  as  pooling  aggre- 
gations, or  as  separate  proprietors,  to  alone  arbitrate  between  them- 
selves and  the  public  under  what  they  regard  as  proper  competitive 
and  other  influences,  subject  to  the  common  law  control  of  the  courts. 
This  theory,  which  is  opposed  not  only  by  extremists,  but  even  among 
the  large  mass  of  conservative  thinkers,  is  not  altogether  approved. 
The  beginning  of  the  solution  of  the  question  must  be  sought  in  a  cor- 
rect analysis  of  the  situation.  The  history  of  the  contest  upon  this 
question  between  the  people  and  railroads,  in  various  States  and  coun- 
tries, is  first  essential.  In  a  report  which  was  adopted  by  the  board  of 
railroad  commissioners  of  New  York,  and  which  was  transmitted  to 
the  State  senate  on  April  11, 1884,  a  phase  of  the  question  is  presented 
(see  Second  Annual  Report,  beginning  at  page  53).  The  conclusions 
reached  were  these  (page  90) : 

1st.  The  pro  rata  freight  bill  as  proposed,  or  as  amended  in  the  communication  to 
the  board,  ought  not  to  become  a  law. 

2d.  There  is  no.  form  of  specific  rate  fixing  legislation  which  can  be  at  present 
recommended.  Such  legislation  should  not  be  attempted  in  this  State  until  it  is 
established  that  all  proper  modifications  in  rates  and  correction  of  existing  wrongs 
cannot  be  obtained  under  existing  laws. 

3d.  Any  form  of  contract  or  any  kind  of  discrimination  against  shippers  which 
compels  citizens  to  refrain  from  freely"  using  the  canals  of  the  State  in  preference  to 
railroads  is  against  a  sound  public  policy,  and  ought  not  to  be  permitted. 

4th.  Railroads  should  not  as  a  general  rule  charge  more  between  a  terminal  and 
an  intermediate  point  for  a  like  class  and  quantity  of  freight  than  is  charged  be- 
tween such  terminal  and  a  more  distant  point,  even  though  at  such  iii  .re  distant 
point  there  be  railroad  or  water  competition,  unless  railroads  can  affirmatively  es- 
tablish such  circumstances  governing  such  competition  as  justify  the  higher  charge 
for  the  shorter  distance. 

5th.  There  should  be  entire  publicity  of  railroad  rates,  whether  the  same  be  tariff 
or  special  rates. 

Before  recommending  any  legislation  to  correct  the  alleged  abuses  indicated,  the 
board  deems  it  better  to  submit  this  report  to  the  consideration  of  the  senate,  with 
the  hope  that  railroads  will,  for  their  own  interest,  by  reformatory  action,  obviate 
the  necessity  of  any  special  legislation. 

The  conclusion  that  no  form  of  specific  rate  fixing  legislation  can  be  re- 
commended is  even  clearer  when  such  legislation  is  considered  in  reference 
to  interstate  commerce  than  when  attempted  within  the  narrow  limits  of 
a  single  State.  The  repeated  failures  to  thus  control  railroads  in  the 
public  interests  and  the  reasons  therefor  noted  in  the  report  mentioned 
forbid  the  attempt  to  fix  rates  and  classification  by  statutes  or  through 
commissions  for  the  vast  and  complicated  business  of  those  engaged 
in  interstate  commerce.  Your  honorable  committee  will  agree  that 
when  one  has  become  acquainted  with  the  history  of  the  question  many 
crude  ideas  as  to  the  usefulness  and  practicability  of  rate  fixing,  penal 
legislation,  pro  rata  laws,  maximum  and  minimum  rate  laws,  &c.,  dis- 
appear, and  it  becomes  clear  that  proposed  legislation  must  be  broader 
in  its  aims  and  less  disturbing  in  its  action  than  that  heretofore  at  times 
much  in  vogue.  The  low  through  rates  of  to-day,  pointed  out  by  rail- 
roads as  a  reason  why  no  legislation  is  needed,  have  little  to  do  with 
the  question.  They  are  a  phase  of  universal  depression,  intensified  by 
reckless  and  needless  railroad  construction.  Unnecessary  railroads 
sooner  or  later  become  public  burdens ;  they  are  neither  efficiently  main- 


INTERSTATE    COMMERCE.  17 

tained  nor  operated,  nor  do  they  permit  competitors  to  fulfill  their 
public  obligations.  Congress  cannot  apply  the  remedy  chiefly  needed. 
The  State  whose  railroads  are  already  sufficient  in  number  and  extent 
for  public  use  at  fair  rates  can  and  ought  to  enact: 

1.  That  no  new  roads  should  be  chartered  unless,  upon  the  part  of 
the  State,  a  public  necessity  for  the  line  is  found  to  exist,  as  in  Massa- 
chusetts, and  as  recommended  by  the  New  York  railroad  commission 
to  the  legislature. 

2.  That  at  least  50  per  cent,  of  the  stock  be  paid  in  before  eminent 
domain  is  exercised  or  construction  begun,  and  that  the  issue  of  bonds 
shall  bear  a  fair' relation  to  the  stock  issued  and  paid  in. 

The  through  low  rates  of  to-day  and  the  rates  influenced  thereby  are 
not  the  trouble  to  be  contended  with.  They  are  low,  too  low,  probably. 
They  are  caused  and  at  all  times  somewhat  controlled  and  regulated 
by  competition  and  other  causes,  even  under  an  efficient  working  pool, 
just  as  railroads  assert.  It  is  at  the  local  non  competitive  points,  which 
to  competitive  points  are  as  ten  to  one,  that  friction  exists,  and  where 
some  protection  for  the  shipper  is  needed  other  than  that  afforded  by 
the  uncontrolled  arbitration  of  the  carrier.  It  is  safe  to  assert  that 
there  are  a  large  number  of  such  places  where  the  influences  causing  low 
through  rates  have  not  sufficient  force  to  prevent  the  existence  of  un- 
just discriminations  and  rates  relatively  too  high.  It  frequently  hap- 
pens that  to  an  excessively  low  through  rate  an  arbitrary  rate  is  added 
from  the  trunk  line  connection  to  the  way  station  on  the  local  road, 
which  causes  grievous  complaint.  A  case  in  point  before  the  New  York 
board  will  be  found  in  its  reports. 

Now,  the  local  rate  may  not  be  too  high  in  many  cases,  and  there  may 
be  no  just  cause  for  complaint,  as  the  railroad  representatives  assert 
before  you,  but  the  peculiarity  of  the  present  situation  is  that  the  rail- 
road and  its  tnanagement  act  as  judge  and  jury  and  decide  the  ques- 
tion. For  reasons  which  will  be  stated,  the  court  can  do  practically 
nothing,  and  thus  the  shipper  is  coerced  out  of  the  clear  right  of  having 
the  question  between  himself  and  the  carrier  fairly  determined  by  an 
impartial  arbiter. 

THE   LEGALIZING   OF   POOLS   OBJECTIONABLE. 

The  railroads  also  insist  that  whatever  exists  of  unjust  discrimination 
will  disappear,  provided  Congress  will  so  legislate  as  to  enable  carriers 
to  compel  each  other  to  maintain  just  and  reasonable  through  rates. 
Suppose  this  should  be  done,  would  not  the  difficulty  suggested  re- 
main? Upon  disputed  questions  as  to  whether  the  rates  were  just  and 
reasonable  or  not,  or  whether  unjust  discrimination  existed  or  not,  the 
carrier  would  remain  the  sole  judge,  influenced  more  or  less  by  circum- 
stances and  a  more  or  less  broad  view  of  the  rights  of  the  shipper,  but 
still  practically  the  sole  judge  and  at  the  same  time  a  litigant.  It  is 
not  necessary  to  determine  to  how  great  an  extent  wrongs  and  unjust 
discrimination  exist  or  is  likely  to  exist.  It  is  enough  to  know  that 
among  the  many  and  complicated  transactions  of  carriers  there  must 
always  of  necessity  arise  numerous  instances  of  alleged  wrong  and  im- 
iust  discrimination ;  that  in  all  such  instances  the  carrier  is  a  party  to 
the  dispute,  and  hence  that,  despite  all  that  can  be  said  as  to  his  supe- 
rior expert  knowledge  and  just  intentions,  he  is  by  all  the  rules  govern- 
ing the  administration  of  justice  disqualified  from  discharging  the  duty 
of  final  arbitration. 

The  legalizatioii  of  "  pools"  in  their  present  form  is  objectionable  for 
16232  AP 2 


18  INTERSTATE    COMMERCE. 

the  reasons  we  have  stated.  The  "  pool"  of  railroads  would  determine 
what  are  reasonable  rates,  ami  what  is  and  what  is  not  unjust  discrim- 
ination. An  impartial  observer  can  concede  all  that  is  claimed  by  the 
advocates  of  "  pools"  as  to  the  benefits  which  have  resulted  from  their 
operation,  and  still  he  cannot  shut  his  eyes  to  the  fact  that,  as  at  pres- 
ent constituted,  they  absolutely,  and  without  appeal  to  any  tribunal, 
determine  what  are  their  duties  and  what  are  the  transportation  rights 
of  the  citizen.  Every  decision  made  by  the  "pool"  may  be  right,  in 
fact,  compelled,  as  asserted,  by  competitive  and  other  considerations, 
and  yet  be  a  wrong  upon  the  citizen ,  because  it  is  made  by  an  interested 
party  who  is  engaged  in  disputing  the  claim  presented.  'The  submission 
pretended  by  railroads  in  debate  to  the  corrective  influences  of  public 
opinion,  the  good-will  of  shippers,  &c.,  is  somewhat  exaggerated.  This 
is  beside  the  question  under  present  discussion,  for  whatever  the  influ- 
ences are  about  an  arbiter  it  is  a  strange  anomaly  for  a  contestant  to 
occupy  that  position.  It  may  be  well  enough,  however,  to  ascertain 
whether  such  influences  are,  after  all,  as  controlling  as  is  claimed. 

In  Volume  I  of  the  first  report  of  the  New  York  commission,  at  page 
83,  will  be  found  the  case  of  Foster  &  Thomson  v.  The  New  York  Cen- 
tral, &c.  The  decision  there  made  was  clearly  in  the  interest  of  New 
York  railroads  and  of  the  entire  grain  shipping  business  of  New  York 
City,  and  was  earnestly  urged  and  sustained  thereby.  The  New  York 
Central,  against  whom  the  complaint  was  nominally  made,  admitted  that 
it  would  be  for  its  advantage  to  follow  the  decision.  The  "  pool,"  how 
ever,  said  it  should  not  be  obeyed.  Not  only  were  the  immense  inter- 
ests involved  unable  to  compel  acquiescence  in  their  just  demand,  but 
the  New  York  roads  had  to  yield  obedience  to  this  final  decision  of  a 
tribunal  put  in  place,  maintained,  and  controlled  by  one  of  the  two  con- 
testants, who  were  the  merchants,  their  business  interests,  and  public 
opinion  on  one  side,  and  railroads  on  the  other. 

At  page  148  of  the  same  report  will  be  found  the  report  in  the  matter 
of  the  complaint  of  the  Chamber  of  Commerce,  sustained  by  the  enor- 
mous dry-goods  trade  of  New  York  and  Chicago,  against  the  trunk 
lines.  All  the  interests  represented  by  the  complainants,  as  well  rfs 
public  opinion,  so  far  as  ascertainable,  commended  the  reclassification 
of  cotton  dry  goods  recommended  by  the  board. 

The  "  pool "  assumed  to  decide  otherwise,  and  an  alleged  wrong  was 
determined  to  be  in  fact  right  by  the  party  against  whom  it  was 
charged,  in  the  face  of  as  vigorous  and  influential  an  expression  of 
public  opinion  as  could  be  elicited  on  any  question.  These  examples 
suffice  to  show  that  the  railroad  claim  as  to  the  sensitiveness  of  rail- 
roads to  the  complaints  of  their  shippers  and  to  public  opinion  is,  as  I 
have  stated,  pictured  too  broadly  by  railroads,  in  debate,  as  a  defense 
of  their  claim  of  the  wisdom  of  continuing  to  permit  them,  absolutely, 
and  without  appeal,  except  to  common  law  courts  unable  to  aid  the 
shipper  as  hereinafter  shown,  to  fix  the  rates  and  conditions  of  trans 
porration,  and  to  determine  all  questions  concerning  extortion  and  un- 
just discrimination.  1  believe  they  should  be  permitted  to  fix  rates  and 
classifications,  terms  and  conditions,  because  I  do  not  deem  it  practica- 
ble to  fix  them  by  statute,  or  through  boards,  officials,  or  commissions, 
but  it  seems  very  clear  that  the  effort  should  be  to  provide  some 
tribunal  which  shall  determine  disputes  between  shippers  anil  carriers 
concerning  the  reasonableness  of  rates,  classifications.  &c.,  and  beloiv 
which  charges  of  unjust  discrimination  can  be  tried  before  those  who, 
at  least,  are  not  tainted  with  a  direct  financial  interest  in  the  decision. 

But  railroads  and  their  leading  representatives  have  stated  tor  years. 


INTERSTATE    COMMERCE.  19 

and  have  repeatedly  stated  before  you,  that  just  suih  tribunals  as  are 
needed  exist  in  tbe  courts,  which  are  provided  to  administer  the  com- 
mon law,  whereby  rates,  &c.,  must  be  reasonable,  and  unjust  discrimina- 
tions avoided.  Why  have  no  actions  been  maintained  in  these  courts  $ 
Assuredly  there  have  been  and  do  exist  unreasonable  rates  and  unjust 
discriminations.  This  much  will  be  admitted  by  all ;  it  will  not  be  de- 
nied even  by  any  carrier.  Why  then  have  not  the  courts  enjoined  the 
continuance  of  the  wrongs  and  enforced  the  payment  of  damages  "\  Why 
again  is  it  that  substantially  no  such  suits  ever  have  been  brought  and 
that  so  few  decisions  in  this  country  exist  ?  It  is  not  because  of  defects 
in  the  law  or  in  the  constitution  of  the  courts,  but  it  is  because  the  sub- 
ject is  one  which  neither  client  nor  lawyer,  judge  nor  jury  can  unravel 
or  deal  with  intelligently  within  the  compass  of  an  ordinary  trial  and 
with  such  knowledge  of  the  matter  as  men  generally  well  educated 
possess.  Let  a  man  take  the  testimony  in  five  volumes  before  the  Hep- 
burn committee;  read  one  hundred  pages  of  the  clear  and  able  state- 
ments of  Mr.  Blauchard,  for  instance,  con  over  the  facts  and  figures  he 
gives,  and  then  let  him  try  to  reach  a  conclusion  upon  the  question  under 
discussion.  Some  conception  will  thus  be  obtained  of  what  a  lawsuit  is 
which  involves  the  reasonableness  of  rates,  or  the  existence  of  an  unjust 
discrimination,  or  a  local  rate  as  compared  with  a  through  rate.  As  the 
onus  is  upon  the  complainant,  add  to  his  difficulties  the  fact  that  his 
adversary  has  nearly  all  the  evidence  in  his  possession,  locked  up  in 
books  and  in  the  memory  and  intelligence  of  experts  who  have  made 
the  subject  their  study.  The  expense  involved,  the  uncertainty  to  be 
faced,  and  the  difficulties  to  be  overcome  in  an  ordinary  suit  at  law  have 
made  that  remedy  obsolete  and  useless.  It  is  time  that  carriers  who 
design  to  discuss  this  question  fairly  admitted  that  shippers  cannot  en- 
force their  claims  for  reasonable  rates  and  to  be  protected  against  un- 
just discrimination  through  the  courts  or  under  the  common  law  any 
more  than  carriers  can  under  the  same  common  law  and  in  the  same 
courts  prevent  competitors  from  pursuing  wrong  and  destructive  poli- 
cies. The  establishment  of  over  twenty  commissions  in  different  States 
is,  in  each  case,  a  declaration  of  this  conclusion,  and  an  effort  to  substi- 
tute some  practical  and  just  remedy  for  the  defect. 

There  is  another  evil  to  be  remedied  which  curiously. results  from  the 
absence  of  some  practical  system  under  which  fair  and  equal  rates  to 
all  can  be  secured,  and  unjust  discriminations  prevented,  as  a  matter  of 
right  and  not  as  a  matter  of  favor,  or  of  chance,  favorable  location 
merely,  or  as  the  result  of  a  just  conception  of  his  duty  on  the  part  of  the 
carrier.  The  difficulty  alluded  to  is  the  defective  system  of  preventing 
losses  and  adjusting  claims  for  property  lost  or  injured  in  transporta- 
tion. In  the  first  place,  there  is  to  a  great  extent  failure  on  the  part  of 
carriers  to  hold  employe's  responsible  for  damage  done.  Carriers  are 
often  careless  in  this  respect  with  their  employers,  because  under  the 
present  system  shippers,  especially  large  ones,  do  not  dare  to  press  their 
claims.  The  power  that  fixes  their  rates  as  at  present  is  not  to  be  of- 
fended by  a  vigorous  urging  of  claims.  In  this  respect  the  trouble  is 
not  with  the  courts,  but  arises,  as  stated  above,  from  the  fact  that  a 
shipper  deemed  unreasonable  about  his  claims,  can  be  subjected  to  much 
greater  losses  under  the  power  to  fix  rates  and  classifications,  for  un- 
just treatment,  in  which  respect  he  is,  as  we  have  shown,  practically 
without  remedy.  Since  the  shippers  are  thus  forced  to  be  lukewarm  in 
the  matter  of  claims,  the  method  of  adjusting  and  paying  them  natur- 
ally inclines  to  be  slow  and  uncertain.  The  fast-freight  lines  have  as- 
sumed to  make  the  legal  remedy  more  difficult  by  inserting  in  their 


20  INTERSTATE    COMMERCE. 

shipping  bills  a  provision  requiring  the  sh  ipper,  in  case  of  loss, 'to  seek 
his  redress  from  the  road  upon  which  the  loss  occurs,  notwithstanding 
that  the  fast-freight  line  takes  the  property  and  contracts  for  its  trans- 
portation. 

There  has  been  great  improvement  in  the  method  of  caring  for  prop- 
erty and  of  adjusting  and  paying  losses  on  the  part  of  many  carriers,  but 
still  the  relative  positions  of  tiic  carrier  and  shipper  are  such,  in  the 
matter  of  rates  and  discriminations,  as  to  present  an  opportunity  to 
carriers  which  oftentimes  enables  them,  if  not  to  avoid  the  payment  of 
just  claims,  at  least  to  unduly  delay  the  settlement.  I  will  now  assume 
that  something  needs  to  be  done  by  Congress,  bearing  in  mind  that 
nothing  has  ever  been  done  ;  that  the  subject  is  full  of  complications; 
that  while  correcting  wrongs  the  rights  of  property  must  be  respected ; 
that  unwise  action  will  be  full  of  danger  to  business  and  will  ultimately 
fail,  and  that  the  regulation  to  be  expected  must,  therefore,  be  a  growth 
rather  than  a  creation. 

Pro  rata  freight,  maximum  and  minimum  rate  laws,  long  and  short 
haul  provisions,  mere  enactments  prohibiting  rebates,  drawbacks,  &c., 
with  penalties  for  violation  attached,  must  be  at  once  discarded,  as  I 
view  the  subject.  The  reasons  for  my  judgment  will  be  found  in  the 
special  report  to  the  senate  of  New  York.  Such  legislation  has  gen- 
erally failed,  and  the  wider  the  field  of  application  the  more  conspicuous 
has  been  the  failure.  Such  statutes  are  not  broad  enough  for  the 
foundation  upon  which  to  build  up  a  system  of  national  regulation  of 
interstate  commerce.  As  experience  grows  some  of  them  may  serve 
useful  purposes,  but  at  the  outset  they  must  be  avoided  as  mischief- 
breeders  only. 

All  agree  that  the  principles  of  the  common  law  are  excellent  if  prop- 
erly and  promptly  enforced.  They  fully  cover  the  carrier's  duty,  and, 
justly  applied,  are  not  onerous.  Why  not,  therefore,  enact  them?  Con- 
gress will  thus  provide  that  rates  shall  be  reasonable ;  that  undue  or 
unreasonable  preferences  or  advantages  shall  not  be  given,  and  that  no 
oue  shall  be  subjected  to  unreasonable  prejudice  or  disadvantage.  Such 
a  statute  will  cover  the  whole  ground,  and  at  the  same  time  will  be 
sufficiently  flexible  to  deal  with  each  particular  case  or  combination  of 
circumstances.  The  reasons  which  support  a  clear  declaratory  statute 
on  the  subject  are  too  clear  to  make  the  objection  available  that  these 
principles  are  the  law  already.  Those  reasons  led  to  a  similar  statute 
in  England,  known  as  the  railway  and  canal  traffic  act  of  1854.  That 
statute  has  been  the  subject  of  judicial  construction  ever  since.  We 
would  have  the  advantage  of  the  English  decisions  thereunder,  not 
necessarily  to  be  always  followed,  but  at  least  as  furnishing  some  guid- 
ance. In  determining  to  follow  the  wording  of  a  statute  which  has 
stood  the  test  of  time,  the  experience  of  Massachusetts  has  been  con 
sidered,  and  your  particular  attention  is  invited  thereto.  After  some 
years'  study  of  the  questions  the  Massachusetts  commission  recom- 
mended, and  the  legislature  passed,  an  act  regulating  rates.  <>n  page 
75,  vol.  1,  of  the  second  annual  report  of  the  New  York  commission 
a  reference  to  this  will  be  found,  as  follows : 

The  nrst  venture  in  this  direction  (specific  legislation  as  to  tariffs)  was  made  on 
March  5fl,  1882.  By  chapter  94  of  the  laws  of  that  year  the  following  was  enacted  : 

"  SECTION  I.  No  railroad  corporation  shall  discriminate  in  charges  for  the  trans- 
portation of  freight  agaiust  or  in  favor  of  any  person,  firm,  or  corporation,  or  demand 
or  accept  from  any  person,  firm,  or  corporation  for  the  transportation  of  freight,  a 
higher  or  lower  rate,  or  demand  or  grant  terms  more  or  less  favorable  than  those  de- 
manded or  accepted  from  any  other  person,  firm,  or  corporation  for  like  service. 

"  SEC.  2.  Any  railroad  company  violating  the  provisions  of  this  act  shall,  in  addi- 


INTERSTATE    COMMERCE  21 

tion  to  liability  for  all  damages  sustained  by  reason  of  such  violation,  be  liable  to 
the  penalty  provided  by  sebtiou  19  of  chap.  112." 

••  The  penalty  alluded  to  was  $200  for  each  offense.  Under  this  act  important  rail- 
road corporations  cut  off,  or  threatened  to  cut  off,  special  rates.  They  insisted  that 
no  other  safe  course  was  left  to  them,  because  courts  and  juries  would  invariably 
construe  the  words  "  for  like  service,"  in  favor  of  complainants  and  against  corpora- 
tions. Under  this  threat  the  merchants  and  manufacturers  of  the  State  urgently 
asked  the  repeal  or  modification  of  the  law.  Uuder  this  pressure,  and  with  the  ap- 
proval of  the  board  of  railroad  commissioners,  the  law  was  amended  by  chapter  '2*25 
of  the  same  year,  so  as  to  read  as  follows  : 

"No  railroad  company  shall,  in  its  charges  for  the  transportation  of  freight,  or  in 
doing  its  freight  business,  make  or  give  any  undue  or  unreasonable  preference  or 
advantage  to  or  in  favor  of  any  person,  firm,  or  corporation,  nor  subject  any  persons, 
firm,  or  corporation  to  any  undue  or  unreasonable  prejudice  or  disadvantage." 

The  reasons  given  by  the  railroad  commission  for  this  sudden  change 
in  the  law  can  be  found  in  the  annual  report  for  1883. 

The  moral  is  clear  that  the  legislative  bodies  should  beware  of  experi- 
mental statutes  upon  this  subject,  especially  when  framed  with  penal 
provisions,  which,  as  the  carrier  justly  observes,  may  impose  severe 
punishment  for  acts  done  through  an  honest  mistake  in  the  application 
and  construction,  of  the  statute. 

The  objection  that  under  the  general  terms  of  such  a  statute  a  car- 
rier cannot  know  his  duty  will  be  hereafter  discussed,  and,  as  I  think, 
is  justly  disposed  of  under  the  remedial  parts  of  the  pro  posed  act.  It 
should  likewise  be  provided  that  carriers  shall  freely  receive  aud  for- 
ward each  other's  freight.  This  provision  is  very  essential  for  the. 
prompt  and  speedy  conduct  of  interstate  commerce.  In  order  to  fairly 
bring  within  the  act  all  commerce  properly  interstate  a  provision  should 
be  inserted  to  prevent  carriage  designed  to  be  continuous,  from  being 
treated  otherwise  by  any  such  device  as  stoppage,  interruption,  &c. 

THE   PUBLICATION   OF   TARIFFS. 

There  has  been  much  discussion  in  and  out  of  Congress  as  to  the  pub- 
lication of  tariffs.  The  system  is  an  untried  one  in  this  country  as  to 
interstate  commerce.  Its  result  is  therefore  largely  speculative.  Pub- 
lic opinion  favors  the  publication  of  tariffs.  Foreign  countries  have 
adopted  it.  Under  our  different  circumstances,  however,  we  cannot 
accurately  judge  from  their  experience  as  to  its  probable  operation  in 
this  country.  The  objections  and  precautions  suggested  by  carriers 
ought  to  be  seriously  considered  as  coming  from  those  in  a  position  to 
best  foresee  the  effect.  Railroads  insist  that  were  such  a  rule  adopted 
it  ought  to  apply  as  well  to  water  carriers  as  to  railroads.  It  seems  to 
me  that  this  is  true.  It  is.doubtful  whether  those  who  represent  rail- 
roads and  water  carriers,  in  making  freight  contracts,  do  not  generally 
at  all  times  know  each  other's  rates.  It  is  the  shipper  who  is  some- 
times in  ignorance  as  to  one  or  the  other.  Why  should  he  not  know 
what  all  rates  are  just  as  he  knows  what  all  taxes  are.  Secrecy  favors 
unjust  discriminations  among  shippers,  as  well  as  aids  railroads  in  un- 
reasonably cutting  each  other's  rates.  Water  carriers  are  generally  at 
a  disadvantage,  even  under  most  favorable  circumstances,  as  against 
railroads,  owing  to  the  superior  facilities  of  the  latter.  Were  this  pub- 
lication proposed  to  increase  that  disadvantage  it  would  perhaps  be  un- 
wise in  the  public  interest.  It  does  not  seem  that  it  would  have  any 
such  effect  in  view  of  the  fact  stated  that  each  can  now  at  all  times  sub- 
stantially know  what  is  the  rate  of  the  other. 

Again,  the  Erie  Railroad,  for  instance,  insists  that  it  will  suffer  be- 
cause it  is  so  entirely  an  interstate  road.  It  would  be  subject  to  the 


22  INTERSTATE    COMMERCE. 

law,  while  its  competitor,  the  New  York  Central,  being  within  the  limits 
of  a  State,  would  not,  as  to  shipments  from  New  York  to  Buffalo.  This 
being  on  the  through  line  to  the  west  would  enable  the  New  York  Cen- 
tral to  make  and  change  its  tariff  at  once  as  it  chose  to,  while  the  Erie 
would  be  tied  up  as  to  that  distance  under  a  published  tariff.  The  same 
kind  of  objection  was  urged  by  the  New  York  Central  against  the  es- 
tablishment of  a  commission  in  New  York  State.  No  disastrous  ef- 
fects to  it  have  resulted  from  the  action  of  the  commission  act,  and  the 
road  has,  as  successfully  as  before,  continued  its  competition  with  the 
Erie.  We  have  already  agreed  that  the  proposed  act  should  forbid  any 
break  or  interruption  of  an  interstate  shipment  for  the  very  purpose  of 
preventing  this  evil.  Were  the  New  York  Central  to  break  or  interrupt 
its  interstate  business  at  Buffalo,  as  suggested,  for  the  purpose  of  evad- 
ing the  act  requiring  publication,  it  would  violate  the  law,  and,  under 
the  remedial  provisions  to  be  hereafter  suggested,  could  be  compelled 
to  stop  the  practice. 

While  to  forbid  railroads  to  charge  more  than  the  published  tariff 
without  notice  is  admitted  to  be  right,  it  is  usged  that  it  would  not  do 
to  prevent  immediate  reductions  without  the  regular  notice  under  some 
circumstances.  This  is  true.  A  notice  of  reduction  to  take  effect  ten 
days  in  advance  might,  to  some  extent,  suspend  business  during  that 
period,  and  would  consequently  overcrowd  the!  carrier  when  the  reduc- 
tion would  become  operative.  It  would  also  prevent  railroads  from 
.taking  freights  unable  to  pay  the  tariff  rates.  For  instance,  a  man  at 
Buffalo  has  one  hundred  cars  of  furnace  cinder  which  can  be  used  in  a 
Chicago  furnace  provided  it  can  be  transported  at  once  at  a  very  low 
rate.  Cars  are  running  west  from  one  third  to  one-half  empty.  The 
railroad  can  better  afford  10  take  it  at  any  rate  than  leave  it.  No  one  is 
injured  by  this,  but  on  the  contrary  the  earnings  of  the  road  are  some- 
what increased,  and  its  other  business  consequently  relieved.  The  ne- 
cessity of  giving  a  five  or  ten  days'  notice  of  change  of  tariff'  would  stop 
such  transactions,  and  would  be  an  injury.  The  provision  forbidding 
lower  than  schedule  rates  at  any  times  to  be  given  ought  not  to  apply 
to  manufacturing  interests.  The  relations  between  manufacturers  and 
carriers  throughout  the  country  are  generally  very  satisfactory.  Lower 
r;\tes  are  generally  needed  and  given  to  manufacturers  than  to  others. 
This  is  not  objected  to  by  our  citizens,  who  realize  the  public  and  local 
benefit  of  having  our  manufactures  successful,  and  who  concede  the  wis 
dom  and  justice  of  permitting  the  present  harmonious  relations  to  con- 
tinue. The  incentive  of  building  up  manufacturing  interests  along  their 
lines  is  almost  universally  sufficient  to  secure  from  carriers  to  manu- 
facturers such  rates  as  their  business  requices. 

To  meet  these  objections,  and  to  permit  the  publication  of  tariffs  to 
be  tried  in  such  a  way  as  not  to  disturb  transportation  methods  too 
roughly,  there  should  be  inserted  in  the  law  permission  to  carry  under 
special  contracts  at  lower  than  schedule  rates,  provided  that  the  terms 
thereof  and  the  names  of  the  parties  to  whom  given,  or  when  given  to 
all  shippers  at  a  shipping  point,  or  to  a  class  of  shippers,  the  name  of 
such  place  or  class  are  plainly  posted  as  a  part  of  the  published  sched- 
ule before  the  shipment  is  made.  The  provision  that  it  shall  not  be  an 
unjust  discrimination  would  apply  as  well  here  as  elsewhere.  Full  pub- 
licity would  be  accomplished,  and  that  after  all  is  the  great  point  to  be 
attained.  Due  consideration  of  the  subject  will  generally  convince  those 
examining  the  question  that  to  require  a  publication  of  rates,  and  to 
provide  that,  without  a  notice  of  specified  length,  no  change  could  be 
made  to  a  lower  rate,  would  be  too  inflexible  to  answer  the  demands  of 


INTERSTATE   COMMERCE.  23 

commerce,  although  it  might  benefit  railroads  J)y  preventing  sudden 
cutting  and  reductions. 

The  question  has  been  mooted  whether  such  tariffs,  before  being  pub- 
lished, ought  not  to  be  approved  by  the  Governmentor  by  its  represen- 
tative. This  would  be  unwise  and  impracticable.  It  would  be  years 
before  any  board,  unless  exclusively  composed  of  carrier  experts,  could 
judge  intelligently  in  advance  about  the  numberless  tariffs  submitted 
to  them.  It  might  be  approved  and  yet,  unknown  to  t^ie  board,  be 
full  of  unjust  discriminations  and  wrongs,  which  would  only  be  de- 
veloped under  its  practical  operation.  There  is  too  much  of  the  foreign 
parental  idea  in  the  theory.  When  governments  begin  on  that  theory 
abroad  they  generally  end  by  owning  the  railroads  as  a  matter  of  neces- 
sity. I  do  not  believe  in  having  the  Government  either  own  or  operate 
railroads.  This  subject  will  be  found  to  be  discussed  at  pages  92,  94, 
&c.,  of  the  Pro  Rata  Freight  Reporter,  hereinbefore  referred  to  and 
herewith  transmitted.  Let  each  carrier  fix  his  own  tariff,  under  a 
statute  requiring  conformity  to  the  principles  which  have  been  stated; 
let  it  be  published  and  changed  only  on  notice,  with  the  exceptions 
above  indicated;  let  its  practical  working  develop  its  wrongs  and  then 
improve  the  administration  of  the  law  so  that  such  wrongs  may  be 
speedily  corrected.  This,  it  is  confidently  believed,  is  all  that  can  be 
safely  attempted  as  a  first  step.  If  it  can  be  accomplished,  it  wijl  be  a 
great  advance  toward  the  safe  and  just  regulation  of  interstate  com- 
merce. 

ADMINISTRATION   OF  THE   LAW. 

There  are  many  who  believe  tha,t  a  new  and  distinct  tribunal  needs  to 
be  created  for  the  determination  of  cases  involving  transportation,  la- 
bor, telegraph,  telephone,  and  such  like  questions,  with  an  appeal  from 
the  decision  thereof  to  the  Supreme  Court.  There  are  serious  objections 
to  such  an  increase  of  the  judicial  department  of  the  Government.  It 
may  come  in  the  future,  but  it  is  at  present  unnecessary.  As  has  been 
shown,  the  fault  lies  neither  in  the  common  law  nor  in  the  courts ;  the 
one  needs  only  to  be  clearly  declared  as  the  law  with  some  supplemen- 
tary provisions  growing  out  of  the  changed  aspects  of  the  transporta- 
tion question  in  modern  times ;  the  other  should  have  the  help  of  a 
board  with  time  and  opportunity  to  unravel  and  clearly  present  the 
facts.  The  carrier  can  then  know  his  duties,  and  the  courts  can  enforce 
their  performance  when  neglected.  A  commission  is  the  most  practica- 
ble creation  for  this  purpose.  Its  operation  in  over  twenty  States  and 
in  England  proves  this  to  be  true.  The  findings  of  such  a  couiinission 
upon  all  questions  of  fact  should  be  accepted  in  all  courts  as  prima  facie 
true.  The  objections  to  this  are  futile.  Such  findings  are  the  one  thing 
most  needed  to  make  the  courts  available  to  shippers  and  to  carriers  as 
against  each  other.  I  have  already  pointed  out  how  utterly  impossible 
it  is  for  a  court  and  jury,  intelligently  and  within  the  limit  of  their  time, 
to  dispose  of  such  intricate  questions  requiring  expert  knowledge  and 
the  sifting  and  weighing  of  many  facts.  Could  shippers,  upon  com- 
plaints, have  the  facts  ascertained  without  expense  to  them  by  a  body 
experienced  in  the  work,  there  would  be  need  of  little  litigation,  and  in 
that  which  occurred  the  court  could  act  promptly.  It  seems  idle  for  a 
commission  to  spend  weeks  in  accumulating  evidence  in  order  to  ascer- 
tain facts  and  then  to  have  its  findings  of  no  avail  to  any  one  in  court. 

No  injustice  would  be  done  to  carriers  since  they  would  be  at  liberty 
to  rebut  the  findings,  and  would  have  in  their  possession  all  the  evi- 
dence with  which  to  disprove  them.  There  is  a  tendency  among  those 


24  INTERSTATE    COMMERCE. 

carriers  who  really  \\;ant  nothing  done  to  suggest  that  if  the  people 
must  have  something,  to  give  them  commissions  with  simply  advisory 
powers.  They  all  promise  respectful  obedience  to  such  commissions, 
and  in  awe,  wonder  who  would  dare  to  disobey  their  suggestions  when 
backed  by  public  opinion.  That  they  do  follow  this  latter  course  has 
been  shown  in  striking  instances.  There  are  carriers  who  are  excep- 
tions,, and  who  generally  do  obey  such  recommendations,  none  more 
notable  in  New  York  State  than  the  New  York  Central  and  Hudson 
River  Eailroad  Company.  Some  refuse  compliance  except  when  the 
recommendations  accord  with  their  own  view  of  their  own  interests ; 
others  evade  compliance  because  systematically  opposed  to  any  regu- 
lation over  them.  All  should  be  made  to  comply  when  the  facts  found 
are  sustained,  and  the  conclusions  drawn  therefrom  are  found  by  the 
court  to  be  just  and  according  to  law.  The  courts  should  be  given 
power  to  enforce  compliance  by  all,  and  for  the  reasons  stated  should 
be  permitted  to  get  at  the  matter  practically  by  having  before  them  as 
prima  facie  evidence  the  findings  of  fact  of  the  commission. 

The  powers  of  the  courts  should  be  to  enforce  prompt  compliance 
with  the  act  by  injunction,  mandamus,  order  or  decree,  and,  in  case  of 
willful  violation,  by  penalties,  and  the  imposition  of  costs.  Carriers 
object  to  a  law  in  general  terms  prescribing  that  rates  shall  be  reason- 
able, and  that  no  unjust  discrimination  shall  be  practiced,  and  provid- 
ing such  remedies  and  penalties  for  violation.  They  say  that  unless 
the  law  prescribes  the  rate,  and  defines-  the  unjust  discrimination,  no 
carrier  can  know  whether  he  is  violating  the  act  or  not.  They  add, 
and  it  is  generally  conceded,  that  it  is  utterly  impossible  to  fix  rates  by 
statute,  or  to  define  unjust  discrimination.  The  objection  is  well  taken, 
but  it  can  be  met  and  justly  disposed  of  in  another  way.  No  action 
should  lie  in  the  courts  provided  the  carrier  within  a  reasonable  time 
shall  adopt  the  recommendations  of  the  commission.  Thus  after  full 
investigation,  and  after  a  clear  determination  as  to  the  unreasonable- 
ness of  the  rate,  &c.,  the  carrier  could  determine  whether  to  contest  or 
not,  and  even  if  he  does  dontest  the  board  findings,  no  penalty  should 
be  allowed  unless  his  conduct  is  found  by  the  court  to  be  willful,  and 
not  the  result  of  a  fair  and  honest  difference  of  opinion. 

THE   COMMISSION. 

A  commission  ought  to  consist  of  not  less  than  five  members,  with 
two,  at  least,  of  them  having  railroad  experience.  They  should  be  most 
carefully  guarded  from  the  temptations  of  their  position.  They  should 
not  be  permitted  to  be  interested  in  the  stock,  bonds,  or  ownership  of  any 
carrier,  nor  to  accept  from  carriers-  anything  except  the  facilities  needed 
to  discharge' their  duties.  That  they  should  not  engage  in  any  other 
business  vocation  whatever  is  a  most  essential  feature,  because  all  busi- 
ness has  relations  with  carriers  and  absorbs  time  and  attention.  The 
duties  will  require  all  the  time  and  attention  which  the  best  men  to  be 
found  can  give,  and  no  conflict  between  their  public  duty  and  fheir 
private  interests  should  ever  exist.  The  salaries  ought  to  be  liberal, 
and  would  not  be  extravagant  at  $10,000,  with  a  higher  rate  for  the 
chairman,  as  in  England.  Carriers  who  are  to  pay  the  same  under  the 
bill  submitted  would  prefer  that  the  salaries  should  be  such  as  to  secure 
the  most  competent  commissioners.  Any  railroad  man  fit  for  the  place 
commands  even  a  higher  salary  than  this.  It  must  also  be  remembered 
that  no  other  public  servant  is  so  absolutely  cut  off  from  profitable  in- 


INTERSTATE    COMMERCE.  25 

vestment  or  employment  as  such  commissioners  must  necessarily  be  in 
order  to  remove  them  from  dangerotts  influences. 

If  it  can  be  done,  a  feature  of  the  New  York  statu'e  should  be  adopted, 
making  the  entire  expense  of  the  commission  a  charge  upon  the  gross 
earnings  of  carriers.  This  is  manifestly  just,  and  in  New  York  State 
operates  without  objection  of  difficulty.  The  powers  of  the  commission 
in  the  way  of  subpoenaing  and  examining  witnesses,  preserving  order 
in  their  proceedings,  compelling  the  production  of  books,  papers,  &c., 
and  punishing  for  contempt,  ought  to  be  the  same  as  possessed  by  the 
courts,  subject  to  review  on  appeal.  In  no  other  way  can  such  a  body 
effectively  prosecute  its  main  work  of  ascertaiug  the  facts  and  of  com- 
pelling respect  for  it  when  discharging  its  duties.  The  details  of  the 
proposed  bill,  as  to  method  of  procedure,  rules,  power  of  investigation, 
annual  report  to  Congress,  &c.,  do  not  need  discussion.  The  provision 
of  the  New  York  act  requiring  the  board,  at  the  request  of  the  governor, 
senate,  assembly,  or  committees  of  the  same,  or  of  railroads,  &c.,  to 
have  hearings  for  and  against,  and  report  upon  proposed  legislation,  is 
a  wise  one.  A  uniform  system  of  accounts  should  be  required  to  be 
adopted  by  carriers  so  far  as  practicable.  The  working  out  of  such 
a  system  must  necessarily  be  the  work  of  time,  to  be  done  by  the 
commission  alter  full  consultation  with  carriers.  The  form  adopted  by 
the  New  York  commission,  and  the  rules  regarding  the  same,  are  here- 
with submitted. 

LEGISLATIVE  ACTION   PROPOSED. 

I  have  prepared  and  herewith  present  for  your  consideration  an  act 
drawn  in  accordance  with  the  foregoing  views.  It  is  not  intended  to 
be  other  than  the  result  obtained  from  careful  examination  of  the  differ- 
ent measures  which  have  heretofore  been  proposed  or  tested,  and  the 
selection  therefrom  of  the  provisions  deemed  most  just  and  practicable. 
I  have  thus  answered  to  the  best  of  my  ability  the  questions  submitted, 
numbered  1, 2, 3, 4,  6, 9, 11, 12, 13,  and  14. 

Second.  In  the  lifth  question  you  inquire  as  to  the  elements  of  cost,  the  conditions 
of  business!,  and  the  other  factors  that  should  be  considered  in  fixing  the  tariffs  on 
interstate  traffic. 

Mr.  Fink  has  fairly  answered  this  question  before  you,  in  my  judg- 
ment. 

Third.  Should  pooling  contracts  and  agreements  between  railroads  doing  an  inter- 
state business  be  permitted,  or  should  they  be  entirely  prohibited  by  law  f  If  they 
should  be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agree- 
ments to  be  made  public  and  subject  to  official  approval  ? 

In  the  pro  rata  report,  hereinbefore  referred  to  (N.  Y.  State  Second 
Annual  Report,  p.  77),  will  be  found  a  discussion  of  pools  and  their 
legal  status,  &c.  Strictly  considered  they  are  by  the  common  law 
illegal  conspiracies.  I  believe  the  system,  however,  to  be  a  wise  one, 
properly  administered  under  limited  governmental  regulation.  Under 
the  provisions  of  the  act  proposed  carriers  might  be  authorized  with- 
out danger  to  enforce  their  traffic  agreements  against  each  other ;  still, 
it  has  seemed  to  me  more  prudent  for  the  present  to  let  the  subject 
await  the  consideration  and  study  of  a  commission,  if  one  is  to  be  ap- 
pointed. It  may.  perhaps,  be  wise  to  leave  the  details  of  pooling  arrange- 
ments to  be  further  worked  out  by  carriers.  Under  the  act  proposed  the 
commission  can  give  publicity  to  all  pooling  agreements.  Mere  official 
approval  of  such  agreements  would  not  be  sufficient.  Such  approval, 
given  in  advance,  might  legalize  wrongs  unknown  and  only  to  be  de- 


26  INTERSTATE    COMMERCE. 

eeloped  after  the  agreement  should  become  effective.  To  let  the  car- 
riers make  their  agreements  subject  to  the  rules  of  law  is  better,  pro- 
vided the  wrongs  therein  can,  upon  complaint,  be  speedily  redressed. 

Fourth.  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  se- 
lect the  lines  and  parts  o'f  lines  over  which  their  shipments  shall  be  transported? 

The  New  York  commission  has  so  decided  as  to  first-class  freight,  in 
the  conclusion  of  which  decision  I  concurred.  Under  the  act  proposed 
such  diversion,  even  by  agreement,  can  be  forbidden  when  it  is  unjust 
and  unreasonable.  I  am  not  prepared  to  say  that  diversion  of  some 
classes  of  freight  may  not  be  made  by  agreement  without  injury,  and 
therefore  may  not  be  permitted.  There  is  some  freight  in  the  trans- 
portation of  which  time  is  not  an  essential.  There  may  also  be  some 
cases  where  it  is  a  just  punishment  for  and  preventive  of  secret  special 
rates,  rebates,  &c.  • 

Fifth.  Should  corporations  engaged  in  interstate  commerce  be  permitted  to  charge 
a  lower  proportionate  rate  for  along  than  a  short  haul?  Does  the  public  interest 
require  any  legislation  on  the  subject  ? 

There  is  no  question  connected  with  transportation  more  troublesome 
than  this.  The  just  and  proper  rule  has  been  the  subject  of  much  dis- 
cussion in  the  New  York  commission  in  the  following  matters : 

Pro  rata  freight  report  (Second  Annual  Eeport,  p.  85),  p.  118,  Utica 
and  Black  Eiver  Kailroad  case.  Pamphlets.  New  York,  Ontario  aod 
Western  case. 

There  is  pending  before  the  board  an  act,  proposed  to  be  submitted  to 
the  legislature,  which  I  regard  as  the  proper  legislation  on  the  subject 
in  New  York  State.  .The  act  reads  as  follows : 

An  act  to  regulate  freight  transportation  and  charges  therefor  upon  railroads. 

The  people  of  the  State  of  New  York,  represented  in  senate  and  assembly,  do  enact 
as  follows : 

SECTION  1.  Every  railroad  corporation  shall  give  to  all  persons  or  companies  rea- 
sonable and  equal  terms,  facilities  and  accommodations  for  the  transportation  of  them- 
selves, their  agents  and  servants,  and  of  any  merchandise  and  other  property  upon  its 
railroad,  and  for  the  use  of  its  depot  and  other  buildings  and  grounds;  and  at  any 
point  where  its  railroad  connects  with  another  railroad,  reasonable  and  equal  terms 
and  facilities  of  interchange. 

SEC.  2.  No  railroad  corporation  shall  charge  or  receive  for  the  transportation  of 
freight  to  any  station  on  its  road  a  greater  sum  than  is  at  the  time  charged  or  received 
for  the  transportation  of  the  like  class  and  quantity  of  freight  from  the  same  original 
point  of  departure  to  a  station  at  a  greater  distance  on  its  road  in  the  same  direction-. 
Two  or  more  railroad  corporations  whose  roads  connect  shall  not  charge  or  receive  for 
the  transportation  of  freight  to  any  station  on  the  road  of  either  of  them  a  greater  sum 
than  is  at  the  time  charged  or  received  for  the  transportation  of  the  like  class  and 
quantity  of  freight  from  the  same  original  point  of  departure  to  a  station  at  a  greater 
distance  on  the  road  of  either  of  them  in  the  same  direction.  No  railroad.corporation 
shall  charge  or  receive  for  the  transportation  of  freight  from  any  station  on  its  road 
to  another  station  a  greater  suiu  than  is  at  the  same  time  charged  or  received  for  the 
transportation  of  the  like  class  and  quantity  of  freight  from  a  station  in  the  same 
direction  and  at  a  greater  distance  on  its  road  to  the  same  point  of  destination.  Two 
or  more  railroad  corporations  whose  roads  connect  shall  not  charge  or  receive  for  the 
transportation  of  freight  from  any  station  on  the  road  of  either  of  them  to  a  station 
on  the  road  of  the  other  a  greater  sum  than  is  at  the  same  time  charged  or  received  for 
the  transportation  of  the  like  class  and  quantity  of  freight  from  a  station  in  the  same 
direction  and  at  a  greater  distance  on  the  road  of  either  of  them  to  the  same  point  of 
destination.  The  rates  upon  freight  shipped  to  or  from  points  outside  the  State  on  a 
through  rate  divided  on  percentages,  and  in  which  one  or  more  foreign  roads  have  an 
interest,  shall  not  be  considered  in  determining  the  rates  to  be  charged  for  shorter 
distances  under  the  provisions  of  this  act.  The  provisions  of  this  section  shall  not 
apply  where  the  board  of  railroad  commissioners  shall  approve  of  rates  to  be  charged 
for  the  transportation  of  freight  or  for  terminal  charges  contrary  to  said  provisions. 

SEC.  3.  A  railroad  corporation  which  violates  any  of  the  provisions  of  this  act,  in 


INTERSTATE    COMMERCE.  27 

addition  to  liability  for  all  damages  sustained  by  reasoi  of  sucb  violation  shall 
be  liable  for  each  offense  for  a  penalty  of  $100,  to  be  sued  for  and  recovered  for  his 
own  uise  by  the  party  aggrieved,  provided  the  action  for  such  penalty  be  brought 
within  one  year  from  the  date  of  such  violation. 

My  reasons  in  favor  of  this  act  will  be  found  in  the  above  citations, 
particularly  in  the  New  York,  Ontario  and  Western  Railroad  case. 
There  ought  to  be  no  legislation  on  this  subject  by  Congress  at  present. 
The  true  rule  in  cases  presented  could  be  determined  and  applied  by 
the  commission  and  the  courts  under  the  act  submitted. 

Sii-th.  Should  any  concessions  in  rates  be  allowed  to  large  shippers,  except  such 
us  represent  the  actual  difference  in  the  expense  of  handling  large  shipments  'over 
small  shipments,  and  should  such  concessions  be  made  known  to  the  public? 

That  they  should  be  made  public  I  have  no  doubt,  and  have  so  pro- 
vided in  the  act  before  you.  Whether  the  rule  stated  in  the  question 
should  determine  the  concessions  to  be  made  to  large  shippers,  I  am 
not  sufficiently  experienced  to  answer.  The  act  submitted  forbids  such 
concessions  as  would  constitute  unjust  discriminations,  &c.,  and  the 
tribunals  established  by  the  act  could  determine  in  cases  presented 
whether  they  were  such  in  fact  or  not.  No  specific  rule  can  be  laid 
down  on  the  question. 

•S  r<?«?/i.  In  making  provision  for  securing  cheap  transportation,  is  it  or  is  it  not 
important  that  the  Government  should  develop  and  maintain  a  system  of  water 

routes? 

Such  water  routes  eifectually  aid  in  preventing  unreasonable  rates  by 
other  carriers,  and  ought  everywhere  to  be  developed  and  maintained. 
The  General  Government  should  adopt  the  policy  suggested  as  to  all 
natural  interstate  water  routes,  such  as  the  Ohio,  the  Mississippi,. and 
their  tributaries,  or  where  the  tide  ebbs  and  flows,  and  Congress  has 
jurisdiction.  Artificial  routes  constructed  within  States,  though  used 
for  interstate  commerce,  should  be  developed  and  maintained  by  the 
Stace. 

On  pages  ISO  to  191  of  volume  I  of  the  report  of  the  New  York  com- 
mission will  be  found  the  views  of  the  commission  as  to  tne  definition 
of  the  term  "  interstate  commerce."  The  act  submitted  has  been  drawn 
in  accordance  with  the  views  of  the  majority,  as  there  expressed. 


An  act  to  regulate  commerce  among  the  several  States. 

SECTION  1.  Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  assembled,  That  for  the  purpose  of  developing  an  intel- 
ligent system  of  regulation  of  commerce  with  foreign  nations  and  among  tie  several 
States,  a  commission  to  be  known  as  the  Board  of  Interstate  Commerce  Commis- 
sioners, is  hereby  created  and  established,  to  consist  of  five  members,  who  shall  be 
appointed  by  the  President  with  the  consent  of  the  Senate,  one  of  whom  shall  be 
appointed  to  hold  office  for  four  years,  two  for  five  years,  and  two  for  six  years. 
Each  of  them  shall  take  an  oath  to  support  the  Constitution  of  the  United  States 
and  to  faithfully  discharge  the  duties  of  his  office.  Two  of  said  members  shall  be 
experienced  in  railroad  business,  two  acquainted  with  commercial  and  agricultural 
interests,  and  one  of  approved  legal  attainments.  Not  more  than  three  of  said  com- 
missioners shall  be  appointed  from  the  same  political  party.  Any  commissioner  may 
be  removed  by  the  President  for  incompetency  or  malfeasance  in  office.  Each  year 
that  terms  shall  expire,  appointments  shall  be  made  in  the  same  manner  for  six  years. 
If  a  vacancy  happens  by  death,  resignation,  removal,  or  otherwise,  appointments 
shall  be  made  for  the  residue  of  the  term.  Such  appointments  shall  be  so  made  as  to 
preserve  in  the  board  as  nearly  as  possible  the  representation  hereinbefore  men- 
tioned. No  person  in  the  employ  of  or  holding  any  official  relation  to  any  common 
carrier  covered  by  the  provisions  of  this  act,  or  owning  stock  or  bonds  thereof,  or 
who  is  in  any  manner  pecuniarily  interested  therein,  shall  hold  either  office.  If  after 
his  appointment  either  commissioner  .shall  by  will,  devise,  or  operation  of  law.  ac- 
quire and  become  vested  with  any  such  interest  as  aforesaid,  he  shall  within  tnree 
months  thereafter  divest  himself  thereof;  and  upon  his  failure  to  do  so,  or  upon  his 


28  INTERSTATE   COMMERCE 

voluntarily  becoming  employed  or  interested  as  aforesaid,  his  office  shall  become  va- 
cant. -Said  commissioners  shall  devote  their  whole  time  and  abilities  to  the  duties  of 
their  office  so  far  as  necessary  to  properly  discharge  the  same,  and  shall  not  engage 
in  any  other  business,  vocation,  or  employment.  No  commissioner  shall  exercise  the 
authority  or  powers  conferred  by  this  act  in  any  hearing,  proceeding,  or  matter  in 
which  he  has  any  pecuniary  interest  whatever.  Neither  said  commissioners  nor  any 
of  their  employe's  shall  accept,  receive,  or  request  any  pass,  present,  gift,  or  gratuity 
of  any  kind  from  any  such  common  carrier  as  aforesaid,  and  the  acceptance,  receipt, 
or  request  thereof  shall  work  a  forfeiture  of  the  office  or  position  of  such  commis- 
sioner or  employe",  and  shall  be  a  misdemeanor  and  punishable  as  such.  Said  board 
shall  be  known  as  The  Board  of  Interstate  Commerce  Commission,  and' shall  have  an 
official  seal,  which  shall  be  judicially  noticed. 

SEC.  2.  Said  board  shall  appoint  a  secretary,  who  shall  keep  a  full  and  faithful 
record  of  the  proceedings  of  the  board,  and  shall  file  and  preserve  at  the  general 
office  of  tha  board  all  books,  maps,  documents,  and  papers  intrusted  to  his  care,  and 
shall  perform  such  other  duties  as  the  board  shall  direct. 

SRC.  4.  Said  board  shall  appoint  an  accountant,  who  shall  be  skilled  in  railroad 
books  aud  accounts,  and  who  shall  perform  such  duties  as  the  board  shall  direct. 

SEC.  5.  The  board  may  appoint  a  stenographer  and  such  additional  clerical  force, 
not  exceeding  in  number,  as  may  be  necessary  for  the  transaction  of  the  busi 

ness  of  the  board,  at  salaries  which  shall  not  exceed  in  the  aggregate  dollars. 

Such  board  shall  appoint  a  marshal,  whose  duty  it  shall  be  to  attend  the  board  at 
its  meetings  and  examinations,  sexve  notices  and  papers,  and  perform  such  other 
duties  as  the  board  shall  direct.  Said  board  may  likewise  employ  experts  for  such 
temporary  service  as  may  be  required  in  conducting  any  examination  or  investiga- 
tion. All  of  the  appointees  and  employe's,  hereinbefore  mentioned,  shall  serve  dur- 
ing the  pleasure  of  the  board. 

SEC.  6.  The  said  commissioners  shall  each  receive  an  annual  salary  of  thousand 
dollars,  except  the  chairman,  who  shall  receive  a  salary  of  thousand  dollars ; 

the  secretary  and  accountant,  dollars  each ;  the  marshal,  dollars.    The 

commissioners  and  their  employe's  shall  be  paid  monthly.  The  members  of  said  board 
and  their  employe's,  hereinbefore  mentioned,  shall  be  transported  over  railroads  and 
in  drawing-room  and  sleeping  cars,  and  in  vessels  and  steamboats  engaged  in  the 
business  of  common  carriers  as  aforesaid,  when  in  the  discharge  of  the  duties  of  their 
office,  free  of  charge,  upon  passes  signed  by  the  Secretary  of  the  Interior,  and  while 
so  doing,  shall  have  such  facilities  and  accommodations  as  are  necessary,  and  shall 
likewise  have  a  right  to  enter  and  remain,  during  business  hours,  in  the  cars,  offices, 
depots,  vessels,  steamboats,  and  other  places  of  business  of  the  said  common  carriers, 
and  they  shall  have  reimbursed  to  them  monthly  the  expenses  and  disbursements 
they  may  have  incurred  when  traveling  in  the  discharge  of  the  duties  of  their  office, 
which  expenses  shall  not,  however,  exceed  in  the  aggregate  dollars  per  month. 

SEC.  7.  The  total  annual  expense  of  the  said  board,  including  salaries  for  commis- 
sioners, secretary,  accountant,  marshal,  stenographer,  clerks,  experts,  printing,  and 
all  other  expenses  incident  to  said  board,  shall  not  exceed  the  sum  of  dollars. 

Such  total  annual  expense  shall  be  audited  and  allowed  by  the  Secretary  of  the  In- 
terior, and  paid  by  the  Secretary  of  the  Treasury  of  the  United  States  out  of  any  un- 
appropriated funds,  from  time  to  time,  remaining  in  the  Treasury.     The  sum  of 
dollars,  or  so  much  thereof  as  may  be  necessary,  is  hereby  appropriated  for  the  uses 
and  purposes  of  this  act  for  the  fiscal  year  ending  ,  eighteen  hundred  and  eighty 

,  and  the  intervening  time  anterior  thereto.  Such  total  annual  expense  shall 
be  borne  by  the*common  carriers  covered  by  the  provisions  of  this  act  as  apportioned 
among  them  by  the  Secretary  of  the  Interior,  who,  on  or  before  the  thirtieth  day  of 
November  in  each  year,  shall  assess  upon  each  of  said  common  carriers 'its  just  pro- 
portion of  said  expenses  in  proportion  to  its  gross  earnings  for  the  year  next  preced- 
ing said  September  thirtieth  in  each  year,  and  such  assessment,  as  matte  by  said  Sec- 
retary of  the  Interior,  shall  stand  as  a  debt  in  favor  of  the  United  States.  It  shall 
be  the  duty  of 'each  common  carrier,  covered  by  the  provisions  of  this  act,  on  or  be- 
fore the  thirtieth  day  of  October,  in  each  year,  to  make  a  report  to  said  commission- 
ers showing  the  amount  of  its  gross  earnings  for  the  year  ending  on  the  preceding 
September  thirtieth.  Such  report  to  be  verified  by  the  president  or  chief  financial 
officer,  owner  or  manager.  In  case  of  failure  to  make  such  report  as  aforesaid,  the 
Secretary  shall  ascertain  and  fix  the  amount  of  such  gross  earnings  as  he  shall  ,deein 
just. 

SEC.  8.  The  boare  shall  have  an  office  in  the  city  of  Washington,  in  rooms  to  be 
designated,  and  supplied  with  necessary  furniture,  fixtures,  postage,  stationery,  and 
appliances  by  the  Secretary  of  the  Interior.  Said  hoard  shall  nicer  then-  on  the  first 
Wednesday  of  every  second  month  from  the  time  of  its  appointment  and  confirma- 
tion. A  record  of  its  proceedings  shall  be  kept  at  all  official  meetings  and  an  ab- 
stract thereof  shall  be  included  in  the  annual  report,  of  the  board.  Said  board  may 
hold  meetings  at  any  time  or  place  within  the  United  States- us  may  be  necessary  for 
the  convenient  transaction  of  its  business,  and  for  the  purpose  of  such  meetings 


INTERSTATE    COMMERCE.  29 

shall  be  provided  with  suitable  rooms  and  accommodations  in  buildings  owned  by 
the  United  States  and  nsed  by  the  United  States  circuit  or  district  courts. 

SEC.  9.  Three  of  said  commissioners  shall  constitute  a  quorum  for  the  transaction 
of  any  of  the  business  of  the  board.  All  examinations  and  investigations  may  be 
hekl  an<l  taken  by  and  before  one  or  more  of  said  commissioners  by  direction  of  the 
board  ;  all  examinations  and  investigations  so  directed  before  one  or  more  of  said 
commissioners  shall  be  reported  to'the  board  for  final  action  thereof.  So  far  as  nec- 
essary for  the  conduct  of  such  examinations  and  investigations,  the  commissioners 
so  directed  by  the  board  shall  have  allot'  the  powers  of  the  board. 

SEC.  10.  The  said  board  shall  have  general  supervision  over  all  common  carriers 
engaged  in  interstate  commerce,  and  shall  keep  themselves  informed  in  relation 
thereto  and  in  regard  to  the  manner  and  method  in  which  the  same  is  conducted, 
and  as  to  the  rates  thereon,  and  the  rales,  regulations,  contracts,  and  conditions 
made  in  connection  therewith,  and  shall  have  the  right  to  obtain  from  such  common 
carriers  full  and  complete  information  in  regard  thereto,  and  to  conduct  or  to  direct, 
before  one. or  more  of  its  members,  examinations  and  investigations  in  relation 
thereto  at  any  time  or  place  within  the  United  States. 

SEC.  11.  To  the  end  of  carrying  out  the  purposes  of  this  act,  said  board  shall  have 
full  power  to  subpoena  and  examine  witnesses  upon  subpoenas  to  be  signed  by  the 
chairman  of  the  board,  or  by  its  secretary  under  its  direction.  Such  witnesses 'shall 
be  paid  the  same  fees  as  in  the  United  States  district  courts,  the  same  to  be  approved 
by  the  board  and  to  be  audited  by  the  Secretary  of  the  Interior.  Officers,  directors, 
principals,  and. employe's  of  such  common  carriers  shall  not  be  paid  any  fees  unless 
tlie  same  arc  specially  allowed  by  the  board.  Such  board  shall  also  have  the  right 
to  examine  the  books,  records,  and  agreements  of  any  such  common  carrier  and  to 
require  the  production  thereof  at  the  place  where  the  principal  office  of  said  common 
carrier  may  be  situated,  or  to  require  sworn  copies  thereof  to  be  furnished  to  it  at 
any  time  or  place.  For  the  purposes  of  compelling  the  attendance  and  examination 
of 'witnesses  and  the  production  of  books,  documents,  and  agreements,  orthe  furnish- 
ing of  sworn  copies  thereof,  and  for  the  purpose  of  preserving  order  and  punishing 
contempt  in  proceedings  before  it,  said  board  shall  have  the  same  powers  as  are  ex- 
ercised by  the  United  States  district  courts,  and  the  action  of  the  board  thereon  shall 
be  subject  to  review  in  like  manner. 

SEC.  i'2.  Every  principal,  officer,  agent,  or  employe"  of  any  such  common  carrier  as 
aforesaid,  who  shall  refuse  or  neglect  to  make  or  furnish  any  statement,  report,  or 
information  required  by  said  board  under  the  provisions  of  this  act,  or  who  shall 
willfully  hinder,  delay,  or  obstruct  said  commission  in  the  discharge  of  its  duties, 
shall  be  guilty  of  a  misdemeanor,  punishable  by  fa'ue  not  exceeding  $5,000,  or  by  im- 
prisonment not  exceeding  one  year,  or  by  both  said  fine  and  imprisonment. 

SEC.  13.  The  said  board  shall  have  power  to  prescribe  a  year  for  such  carriers,  and 
the  form  of  annual  report  to  be  made  by  such  common  carriers,  and  from  time  to  time 
to  make  changes  and  additions  in  such  form,  and  also  from  time  to  time  to  prescribe 
the  manner  in  which  the  books  and  accounts  of  such  common  carriers  shall  be  kept. 
Neglect  or  refusal  to  make  such  annual  or  other  reports  as  the  commission  may  require, 
or  to  correct  the  same  as  required,  within  such  time  as  the  commission  shall  fix,  shall 
subject  such  common  carrier  to  a  tine  not  exceeding  $500  and  $25  per  day  for  each  day 
that  such  neglect  or  refusal  shall  continue. 

Six.  14.  The  said  board  shall  make  an  annual  report  to  Congress  on  or  before  the 
iirst  day  of  January  in  each  year  of  their  doings,  including  such  facts,  statements, 
and  explanations  as  will  disclose  the  actual  working  of  the  various  systems  of  inter- 
state commercial  transportation,  together  with  such  suggestion  as  to  the  general 
policy  of  the  United  States,  and  such  amendments  or  dralts  of  laws  as  may  to  it  seem 
proper  and  necessary.  And  it  shall  likewise  be  the  duty  of  said  board  to  take  testi- 
mony upon  and  to  have  hearings  for  and  against  any  proposed  change  of  the  laws  re- 
lating to  interstate  commerce,  when  requested  to  do  so  by  Congress  or  by  the  Com- 
mittee on  Commerce  of  the  Senate  or  House  of  Representatives,  or  by  the  President, 
or  by  any  common  carrier  covered  by  the  provisions  of  this  act,  or  by  any  incorpor- 
ated organization  representing  agricultural,  commercial,  or  manufacturing  interests, 
and  said  board  shall  thereupon  report  its  conclusions  to  the  source  from  which  the 
request  emanated.  The  said  commission  shall  have  two  thousand  copies  of  its  an- 
nual report  printed  for  its  use,  and  other  copies  thereof  shall  be  distributed  by  the 
Secretary  of  the  Interior  as  are  other  reports  issued  from  the  Interior  Department. 

Si:c.  15.  The  said  board  shall  inquire  into  that  method  of  railroad  management  or 
combination  known  as  pooling,  and  shall  have  hearings  for  and  against  any  legis- 
lation proposed  to  said  board  in  relation  thereto,  and  shall  report  to  Congress  in 
its  annual  report  what,  if  any,  legislation  is  advisable  and  expedient  upon  that 
subject.  Every  agreement  and  contract  for  "pooling"  of  freight  transportation 
or  business  between  such  common  carriers,  or  any  of  them,  shall  be  filed  in  the 
office  of  said  commission  before  the  same  shall  go  into  eliect.  Any  party  thereto 
failing  to  comply  with  ttfiis  requirement  shall  be  subject  to  a  penalty  not  exceeding 
$1,000  and  of  $50  for  each  day  that  such  party  shall  fail  as  aforesaid, 'provided,  bow- 


30  INTERSTATE    COMMERCE. 

ever,  that  the  filing  of  such  contract  or  agreement  by  one  of  the  parties  thereto  shall 
be  deemed  a  sufficient  compliance  with  this  requirement. 

SEC.  16.  Copies  of  all  reports,  papers,  and  documents  on  file  in  the  office  of  said 
board,  when  duly  certified  by  the  chairman  or  secretary  of  the  board,  shall  be  evi- 
dence in  all  courts  and  places  equally  and  in  like  manner  as  the  originals. 

SEC.  17.  The  said  board  shall  charge  and  collect  for  certified  copies  ot  all  official 
documents  10  cents  for  each  folio  of  one  hundred*  words,  and  shall  pay  all  such  fees 
collected  into  the  Treasury  of  the  United  States  quarterly  to  the  credit  of  the  general 
fund,  together  with  a  detailed  statement  thereof. 

SEC.  lc!.  The  district  attorneys  of  the  United  States  in  their  respective  districts 
shall  at  the  request  of  said  commission  act  for  and  represent  it  in  all  suits  and  pro 
ceedings  before  the  courts  of  the  United  States. 

SEC.  19.  All  charges  by  common  carriers  covered  by  the  provisions  of  this  act  shall 
be  reasonable.  So  such  carrier  shall  make  or  give  any  undue  or  unreasonable  pref- 
erence or  advantage  to  any  particular  person,  company,  firm,  corporation,  locality, 
or  any  particular  description  of  traffic,  in  any  respect  whatsoever ;  nor  shall  any  such 
carrier  subject  any  particular  person,  company,  firm,  corporation,  locality,  or  any 
particular  description  of  traffic  to  any  undue  or  unreasonable  prejudice  or  disadvan- 
tage in  any  respect  whatsoever;  and  every  such  common  carrier  having  or  operating 
a  part  of  a  continuous  line  of  communication,  or  which  has  the  terminus  or  station 
of  the  one  at  or  near  the  terminus  or  station  of  the  other,  sball  afford  all  due  and 
reasonable  facilities  for  receiving  and  forwarding  all  the  traffic  arriving  by  one  of 
such  common  carriers  by  the  other  without  any  unreasonable  delay,  and  without  any 
such  preference  or  advantage  or  prejudice  or  disadvantage  as  aforesaid,  and  so  that 
no  obstruction  may  be  offered  to  the  public  desirous  of  using  such  common  carrier  as 
aforesaid  as  a  continuous  line  of  communication,  and  so  that  all  reasonable  accom- 
modation may  by  means  of  such  carrier  be  at  all  times  afforded  to  the  public.  No 
break,  stoppage,  or  interruption,  nor  any  contract,  agreement,  or  understanding  shall 
be  made  to  prevent  the  carriage  of  any  property  from  being  and  being  considered  as 
one  contimious  carriage  in  the  meaning  of  this  act  from  the  place  of  shipment  to  the 
place  of  destination,  unless  such  stoppage,  interruption,  contract,  agreement,  or 
understanding  was  made  in  good  faith  for  some  practical  and  necessary  purpose, 
without  any  intent  to  avoid  or  interrupt  such  continuous  carriage  or  to  evade  any  ol 
the  provisions  of  this  act. 

SEC.  20.  Each  common  carrier  covered  by  the  provisions  of  this  act  shall  by  sched- 
ules to  be  adopted  and  kept  posted  as  hereinafter  stated,  prescribe — 

First.  The  different  kinds  and  classes  of  property  to  be  carried. 

Second.  The  different  places  between  which  such  property  shall  be  carried. 
'    Third.  The  rates  of  freight  and  charges  for  all  services  connected  with  the  receiv- 
ing, transporting,  delivering,  loading,  unloading,  storing,  and  handling  of  the  same. 

Fourth.  The  conditions,  rules,  and  regulations  with  respect  to  the  receiving,  trans- 
porting, delivering,  loading, 'unloading,  storing,  and  handling  of  the  same,  provided 
that  any  such  condition,  rule,  or  regulation  shall  cease  to  be  valid,  or  further  permit- 
ted, whether  assented  to  by  the  shipper  or  not,  if  upon  complaint  to  said  commission 
the  same  shall  be  found  by  the  commission,  and  adjudged  by  the  court,  to  be  unjust 
and  unreasonable. 

Copies  of  such  schedules  shall  be  printed  in  large,  plain  type,  not  smaller  than  or- 
dinary pica,  and  shall  be  kept  plainly  posted  for  public  inspection  in  at  least  two 
places  accessible  to  the  public  in  every  depot,  or  freight  office,  or  vessel,  where 
freights  are  received  and  delivered  ;  and  no  such  schedule  shall  be  changed  in  any 
particular  except  by  the  substitution  of  another  schedule  containing  the  specifica- 
tions above  required,  which  substituted  schedule  shall  plainly  state  the  time  when  it 
shall  go  into  effect,  and  copies  of  which,  printed  as  aforesaid,  shall  be  posted,  as 
above  provided,  at  least  five  days  before  the  same  shall  go  into  effect;  and  each 
schedule  shall  remain  in  force  until  another  schedule  shall,  as  aforesaid,  be  substi- 
tuted. A  copy  of  each  of  said  schedules  shall,  as  soon  as  posted  as  aforesaid,  be  tiled 
in  the  office  of  said  board.  And  it  shall  be  unlawful  for  any  such  common  carrier, 
after  the  expiration  of  ninety  days  after  the  passage  of  this  act,  to  charge  or  receive, 
directly  or  indirectly,  or  by  means  of  rebates,  drawbacks,  or  otherwise,  more  or  less 
compensation  for  the  carriage,  receiving,  delivering,  loading,  unloading,  handling,  or 
storing  of  any  property  than  shall  be  specified  in  such  schedule  as  may  at  the  time  be 
in  force,  except  that  special  contracts  for  such  services  may  be  made  at  lower  rates 
than  stated  in  such  schedules,  provided  that  the  terms  thereof,  and  the  names  of  the 
parties  to  whom  given,  or  when  given  to  all  shippers,  or  to  a  class  of  shippers  at  a 
shipping  }*>int,  the  name  of  such  place  or  class,  are  plainly  posted  as  aforesaid  as  a 
part  of  said  schedules,  at  the  place  of  shipment,  before  said  service  or  any  part  thereof 
is  rendered;  and  further  provided  that  any  such  special  contracts  shall  cease  to  be 
lawful  or  further  permitted,  if  upon  complaint  to  said  commission  the  same  shall  be 
found  by  the  commission  and  adjudged  by  the  court  to  violate  the  provisions  of  section 
19  of  this  act.  Any  such  common  carrier  who  shall  fai'  to  comply  with  the  pro- 


INTERSTATE    COMMERCE.  31 

visions  of  this  section  shall  be  liable  to  a  penalty  not  exceeding  $1,000  and  not  ex- 
ceeding $50  for  each  day  that  such  violation  shall  continue. 

SEC.  21.  That  any  person,  firm,  corporation,  or  association,  complaining  of  anything 
done  or  omitted  to  be  done-  by  any  common  carrier  covered  by  the  provisions  of  this 
act  in  contravention  of  the  provisions  thereof,  may  apply  to  said  board  by  petition  in 
writing,  which  shall  briefly  state  the  facts.  If  the  petition  is  signed  by  any  board  of 
trade  or  commercial  body,  or,  when  signed  by  an  individual,  if  it  bears  the  certificate 
of  any  district  attorney  of  the  United  States,  or  any  district  or  county  attorney  or 
officer  corresponding  thereto  of  any  State  or  Territory,  that  he  has  examined  the 
facts,  and  in  his  opinion  the  complaint  is  well  founded,  the  board  is  hereby  required 
to  entertain  and  investigate  the  same.  In  all  other  cases  the  board  shall  decide 
whether  or  not  the  petition  ought  to  be  proceeded  with.  Before  proceeding  upon  any 
such  investigation,  when  founded  upon  a  petition,  a  copy  thereof  shall  be  served 
upon  the  party  or  parties  complained  of,  and  an  opportunity  shall  be  given  to  answer 
the  same  in  writing.  Thereafter  it.  shall  be  the  duty  of  the  commission,  if  it  shall 
think  fit,  to  couduct  such  investigations  in  such  manner,  and  by  such  persons  and 
means,  as  it  shall  think  proper,  into  all  such  matters  of  fact  as  may  be  deemed  neces- 
sary to  enable  the  commission  to  form  a  just  conclusion  in  respect  to  the  matter  of 
such  petition.  The  commission  may  establish  general  orders  for  the  conduct  of  its 
proceedings,  which  shall  secure  to  all  persons  interested  reasonable  notice  and  op- 
portunity to  be  heard.  If  in  any  case  in  which  an  investigation  shall  be  made  by 
said  commission  it  shall  be  made  to  appear  to  the  satisfaction  of  the  commission, 
either  by  the  testimony  of  witnesses  or  other  evidence  adduced  before  it,  or  by  the 
report  of  any  person  to  whom  the  commission  may  have  referred  the  inquiry  or  any 
part  thereof,  that  anything  has  been  done  or  omitted  to  be  done  in  violation  of  the 
provisions  of  this  act  by  any  such  common  carrier,  it  shall  be  the  duty  of  such  com- 
mission to  make  its  report  in  writing  in  respect  thereto,  which  report  shall  include 
the  findings  of  fact  upon  which  the  conclusions  of  the  commission  are  based,  and 
which  findings  so  made  shall  thereafter  be  deemed  prima  facie  evidence  as  to  each 
and  every  (act  found  in  all  courts  and  places.  Within  a  reasonable  time,  not  to  ex- 
ceed twenty  days,  after  such  report  is  made  by  said  commission  it  shall  cause  a  copy 
thereof  to  be  served  upon  or  delivered  to  the  said  common  carrier  so  found  to  have 
violated  the  provisions  of  this  act,  together  with  a  notice  to  said  common  carrier 
forthwith  to  cease  and  desist  from  such  violation. 

SEC.  22.  Unless  said  common  carrier  shall  within  twenty  days  after  service  upon 
it  of  said  report  and  notice,  or  within  such  other  time  as  said  commission  shall  fix  in 
said  notice,  cease  and  desist  from  such  violation,  it  shall  be  the  duty  of  the  district 
attorney  of  the  United  States  for  the  district  in  which  the  violation  occurred,  to  apply 
by  petition,  in  the  name  of  the  complainant  before  said  board,  or  of  the  party  ag- 
grieved, to  the  circuit  court  of  the  United  States  for  such  district,  for,  and  it  shall  be 
the  duty  of  such  court  to  grant,  an  order  for  such  common  carrier  to  show  cause  why 
it  should  not  be  enjoined  and  restrained  against  the  continuance  of  such  violation, 
and  for  such  other  order  and  relief  in  the  premises  as  may  be  just  and  proper.  For 
the  purpose  of  making  any  such  order  or  decree,  final  or  otherwise,  such  court  shall 
be  always  open,  and  the  day  on  which  any  such  order  or  decree  is  made  shall  be  a 
special  term  of  such  court.  Upon  the  service  and  return  of  such  order  to  show  cause, 
and  notice  to  such  parties  as  may  be  deemed  necessary,  said  court  shall  proceed  as 
speedily  and  summarily  as  possible  to  hoar  and  determine  the  matters  in  controversy  ; 
and  whenever  said  court  shall  be  of  opinion  that  .such  common  carrier  has  done 'as 
aforesaid,  or  is  doing  any  act  in  violation  of  the  provisions  of  this  act  as  in  said  report 
set  forth,  it  shall  then  be  the  duty  of  said  court  forthwith  to  issue  a  writ  of  injunction 
requiring  such  common  carrier  to  desist  and  cease  from  such  violation  of  the  provis- 
ions of  this  act.  Such  court  may  enforce  obedience  to  any  such  injunction,  order,  or 
decre<-  by  any  such  common  carrier,  or  any  officer,  agent,  or  employ6  thereof,  by  fine, 
proceedings  tor  contempt,  and  all  other  means  within  its  lawful  jurisdiction,  sitting 
as  a  court  of  equity.  Any  person  interested  to  restrain  such  violation  may  be  allowed 
to  appear  and  be  heard  in  person  or  by  counsel;  and  upon  proof  before  said  court 
that  any  district  attorney  has  failed  in  any  such  case  as  aforesaid  to  apply  for  such 
order  to  show  cause,  the  court  may  permit  such  application  to  be  made  and  prosecuted 
by  or  in  behalf  of  any  person  so  interested.  Such  court  may,  in  its  discretion,  award 
or  deny  costs  to  any  party  to  such  proceeding.  In  any  case  where  the  court  shall 
adjudge  that  the  violation  of  the  provisions  of  this  act  by  any  such  common  carrier 
has  been  willfully  continued  after  the  expiration  of  said  twenty  days,  or  after  the 
expiration  of  the  time  fixed  as  aforesaid  by  said  board,  the  court  may  award  to  any 
party  injured  such  a  gross  sum,  by  way  of  costs,  as  will  reimburse  all  his  costs, 
charges,  expenses,  counsel  fees,  and  disbursements  to  be  paid  by  such  carrier,  and 
whall  also  impose  a  penalty  not,  exceeding  $5,000.  and  not  exceeding  $100  per  day  for 
eaeli  day  that  such  violation  shall  continue  after  the  expiration  of  the  time  afore- 
said. 

SEC.  £}.  The  term   "common  carrier,"  as  used  in   this  act,  shall  be  deemed  and 


32 


INTEESTATE    COMMERCE. 


taken  to  mean  any  corporation,  association,  company,  individual,  receiver,  trustee, ' 
or  partnership,  owning,  operating,  or  using  any  railroad  or  railroads,  vessel  or  ves- 
sels, in  whole  or  in  part,  and  engaged  in  the  business  of  transporting,  or  of  agreeing 
lo  transport,  or  to  furnish  transportation  for,  freight  or  property  of  any  description 
by  railroad  or  by  water,  or  partly  by  one  and  the  other,  from  one  State  into  or 
through  another  State  or  Territory  or  from  any  Territory  into  or  through  any  State 
or  other  Territory,  or  engaged  in  the  transportation  of,  or  agreeing  to  transport  or  to 
furnish  transportation  for,  commerce  among  the  several  States. 

SEC.  24.  Nothing  in  this  act  shall  apply  to  the  storage,  handling,  or  transportation 
of  freight  or  property  wholly  within  one  State  or  Territory  and  not  destined  for  con- 
tinuous carriage  beyond  such  State  or  Territory,  or  to  the  storage,  handling,  or  trans- 
portation of  freight  or  property  free  or  at  reduced  rates  for  the  United  States,  or 
municipal  governments,  or  for  charitable  purposes,  or  to  or  from  fairs  and  expositions 
for  exhibition  thereat,  nor  to  prevent  the  giving  of  special  rates  and  facilities  to 
manufacturers ;  provided,  however,  that  no  such  common  carrier  shall  make  or  give 
any  undue  or  unreasonable  preference  or  advantage  to  any  particular  manufacturer 
as  against  his  competitors  or  other  manufacturers,  nor  subject  any  such  manufacturer 
to  any  undue  or  unreasonable  prejudice  or  disadvantage  in  any  respect  whatsoever 
as  against  his  said  competitors  or  other  manufacturers ;  and  further  provided,  that 
such  rates,  so  given,  are  posted  as  hereinbefore  required. 

SEC.  2f>.  Nothing  in  this  act  contained  shall  to  any  extent  or  in  any  degree  impair 
or  affect  the  legal  liability  of  any  carrier  for  the  consequences  of  its  acts,  or  of  the 
neglect  or  mismanagement  of  any  of  its  agents  or  servants. 


THE  MICHIGAN  RAILKOAD  COMMISSIONERS. 

Statement  by  William,  McPherson,  jr.,  tlie  Commissioner  of  Railroads,  a,nd 
Wyllys  C.  Ransom,  Deputy  Commissioner,  State  of  Michigan. 

The  relations  of  Michigan  to  the  general  systems  of  inland  transpor- 
tation are  exceptional  to  those  of  most  of  the  States.  Nearly  encir-- 
cled  by  the  great  American  lakes,  we  have  a  water  front  of  1,620  miles. 
At  frequent  intervals  along  such  front  safe  and  capacious  harbors  afford 
facilities  for  the  entrance  of  vessels,  by  means  of  which  our  varied  com- 
modities and  products  are  shipped,  via  lake,  canal,  and  sea,  to  the  prin- 
cipal markets  of  the  world.  Such  medium  of  transportation,  it  hardly 
need  be  said,  affords  the  lowest  tariff  of  rates  to  shippers,  and  during 
the  season  of  navigation  virtually  establishes  the  figures  at  which  our 
freights  are  carried  to  tide- water  points. 

Supplementing  the  facilities  for  water  transportation  which  the  State 
enjoys,  it  had  within  its  limits  on  the  1st  day  of  January  last  5,142 
miles  of  railroad,  reaching  into  every  county  of  the  lower  peninsula 
save  eight,  and  of  the  upper  peninsula  save  two,  and  an  average  of 
1  mile  of  track  for  each  11.16  square  miles  of  its  territorial  area.  The 
following  statement,  taken  from  the  forthcoming  annual  report  of  this 
Department  for  the  current  year,  will  best  exhibit  the  gradual  develop- 
ment of  the  railroad  system  of  the  State  to  its  present  proportions: 

Table  showing  progress  of  railroad  construction  in  Michigan  from  1838  to  1884,  inclusive. 


"Sear. 

Wiles. 

Tear. 

Miles. 

Year. 

Miles. 

Tear. 

Miles. 

1838  ... 

63 

1850  . 

380 

1862 

811 

1874 

3  313 

1839  

71 

1851 

421 

1863 

812 

1875 

3  347 

1840  

104 

1852  ... 

425 

1864 

891 

1876 

3  410 

1841  

147 

1853 

425 

1865 

931 

1877 

3  455 

1842  

147 

1854  

425 

1866 

943 

1878 

3  564 

1843  

180 

1855  

402 

1807   . 

1  066 

1879 

3  657 

1844  

220 

1856  . 

530 

1868 

1  124 

1880 

3  823 

1845  

233 

1857  .. 

579 

1869 

1  362 

1881 

4  °52 

1846  

279 

18f>8  

703 

1870 

]  73!t 

1882 

4  609 

1847  

279 

1HM)  

770 

1871 

2  298 

1883 

4  %6 

1848  

326 

1860  

770 

1872 

2  8^2 

1884 

5  142 

1849  

353 

1861  . 

1873 

3  252 

INTERSTATE    COMMERCE.  33 

The  original  plan  of  internal  improvments  for  Michigan  was  formu- 
lated by  the  first  administration  of  the  State,  which  began  the  work  of 
constructing  three  separate  lines  of  railroad  across  the  lower  peninsula, 
from  Detroit,  Monroe,  and  Port  Huron,  on  the  eastern  boundary  of  the 
State,  to  points  on  Lake  Michigan,  respectively.  It  was  designed  that 
these  works,  when  completed,  should  be  controlled  and  operated  by  the 
State.  But  after  nearly  ten  years  of  adverse  experience,  the  contem- 
plated lines  being  only  partially  completed,  and  that  in  an  indifferent 
manner,  and  available  resources  for  their  further  extension  having  been 
.  practically  exhausted,  the  roads  were  sold  to  companies  chartered  for 
the  purpose  of  purchasing  and  completing  them;  and  the  constitution 
adopted  in  1850  inhibited  the  State  from  future  connection  with  the 
building  of  railroads  or  other  schemes  of  internal  improvement. 

The  roads  planned  by  the  State  were  long  since  completed.  A  fourth, 
reaching  across  the  State,  between  Saginaw  and  points  on  Lake  Michi- 
gan at  Ludington  and  Manistee,  with  an  "L"  extending  southwardly 
to  Toledo,  is  in  operation,  and  two  other  lines  from  the  Straits  of  Macki- 
nac,  traversing  the  easterly  and  westerly  water  sheds  of  the  lower  pe- 
ninsula, respectively,  to  the  south  boundary  of  the  State,  complete  the 
system  of  "trunk  lines,"  and  these,  supplemented  by  local  roads  inter- 
secting the  former  at  prominent  points,  afford  facilities  for  traffic  by  rail 
under  the  most  favorable  conditions.  These  properties  are  included  in 
large  proportion  by  four  systems,  each  with  a  separate  management. 

First :  The  Michigan  Central,  having  its  eastern  connections  at  De- 
troit with  the  Canada  Southern,  one  of  its  leased  lines,  and  at  Toledo 
with  the  Lake  Shore  and  Michigan  Southern,  and  systems  converging 
at  that  point,  its  western  terminus  being  at  Chicago.  On  the  1st  day 
'of  January  last  the  system  comprised  within  the  limits  of  the  State 
1,024.34  miles  of  track. 

Second  :  The  Lake  Shore  and  Michigan  Southern  system,  its  termi- 
nals at  Buffalo  and  Chicago,  and  having  in  Michigan  on  the  first  of  the 
current  year  513.56  miles  of  track  in  operation. 

Shese  two  systems,  it  is  understood,  are  controlled  by  the  same  inter- 
est, and,  although  generally  regarded  as  competitive  lines,  it  is  be- 
lieved by  those  most  familiar  with  the  relations  between  the  two  that 
neither  would  insist  upon  the  traffic  rates  to  the  damage  of  the  other. 

Third :  The  Grand  Eapids  and  Indiana  Kailroad,  having  on  the  1st 
of  January  last  380.76  miles  of  track  within  the  limits  of  the  State,  and 
in  reality  forming  a  part  of  the  great  Pennsylvania  system,  with  its 
eastern  connection  at  Fort  Wayne,  in  the  State  of  Indiana. 

Fourth :  The  Grand  Trunk  of  Canada  system,  having  under  its  con- 
trol and  in  operation  at  the  commencement  of  the  year  577.96  miles  of 
road  in  the  State  of  Michigan,  with  outlets  at  Detroit  and  Port  Huron 
over  its  Great  Western  division  to  eastern  connections  at  Suspension 
Bridge,  and  its  main  line  through  the  Dominion  of  Canada,  to  its  ex- 
treme eastern  terminal,  at  Portland,  Maine. 

The  foregoing  systems  are  all  limited  in  their  operations  to  the  lower 
peninsula.  The  upper  peninsula  finds  the  principal  outlet  for  its  im- 
mense mineral  product  over  the  tracks  of  the  Chicago  and  Northwest- 
ern system,  of  which  there  are  308.49  miles  within  the  limits  of  the  State 
of  Michigan. 

Such,  briefly  recited,  is  the  situation  of  our  railroad  properties  in 

their  organized  capacity  for  doing  the  inland  transportation  business 

of  the  State.     It  is  possible  that  the  detail  is  somewhat  foreign  to  the 

purpose  of  the  inquiry  for  which  your  Committee  was  appointed.    But 

16232  AP 3 


34  INTERSTATE    COMMERCE. 

as  it  is  probably  true  that  little  dissatisfaction  exists  among  the  people 
of  Michigan  over  the  present  status  of  the  transportation  question  so 
far  as  their  interests  are  affected  by  the  same,  and  also  true  that  the 
average  freight  rate  prevailing  in  the  State,  with  a  single  exception,  is 
the  lowest  of  any  iu  the  Union,  it  will  not  be  unprofitable  for  your  Com- 
mittee to  have  before  it  such  outline  of  our  railroad  system  as  will  ena- 
ble it  to  more  clearly  determine  what,  if  any,  peculiar  circumstances  of 
situation  or  relation  to  connecting  lines  in  other  States  have  contrib- 
uted to  bring  about  the  satisfactory  results  indicated  above,  and  also  to 
institute  comparisons  with  the  systems  and  workings  of  other  States, 
where  complaints  of  discrimination  and  extortion  exist. 

THE   COURSE   OF   STATE  LEGISLATION. 

First,  it  may  be  said  that  the  legislatures  of  this  State  have  manifested 
but  little  disposition  to  exercise  control  over  the  traffic  operations  of 
our  railroads  :  in  fact,  practically  they  have  been  left  to  regulate  their 
own  rates  of  transportation  as  circumstances  and  volume  of  business 
seem  to  warrant.  The  first  general  railroad  law  of  the  State  was  not 
passed  until  1855,  tbere  being  at  that  time  only  462  miles  of  track  within 
our  limits,  all  of  which  had  been  constructed  under  special  charters, 
the  traffic  rates  which  the 'companies  might  charge  being  limited  by 
the  provisions  of  such  charters.  In  such  general  law,  among  other 
rights  and  franchises  granted  to  companies  organizing  under  Us  pro- 
visions, was  'kthat  of  regulating  the  time  and  manner  in  which  pas- 
sengers and  property  shall  be  transported,  and  the  tolls  and  compensa- 
tion to  be  paid  therefor;  but  such  compensation  for  any  passenger  and 
his  ordinary  baggage  shall  not  exceed  three  cents  a  mile,  unless  by 
special  act  of  legislature,  and  subject  to  alteration  as  hereinafter  pro- 
vided." 

The  provision  for  alteration  of  rates  above  referred  to  was  as  follows: 

The  legislature  may,  when  any  railroad  organized  under  the  act  is  opened  for 
business,  from  time  to  time  alter  or  reduce  the  toll,  fare,  freight,  or  other  profits  upon 
such  road ;  but  the  same  shall  not  without  the  consent  of  the  corporation  be  so  re- 
duced as  to  produce  less  than  15  per  cent,  per  annum  on  the  capital  paid  in,  nor  un- 
less on  examination  of  the  amounts  received  and  expended,  to  be  made  by  the  auditor- 
general,  he  shall  ascertain  that  the  net  income  of  the  company  from  all  sources 
divided  by  the  company  for  the  year  then  last  past  shall  have  exceeded  an  annual 
income  of  15  per  cent,  upon  the  capital  of  the  corporation  actually  pain  in. 

Certainly  a  liberal  provision,  and  one  calculated  to  stimulate  the 
investment  of  capital  in  railroad  enterprises  within  the  State. 

The  act  of  ]855  remained  in  force  without  material  amendments  until 
1871,  when  the  legislature  made  a  general  revision  of  its  provisions. 
The  track  mileage  of  the  State  had  increased  during  tbe  period  of  four- 
teen years  from  462  miles  to  2298,  and  many  newly  projected  lines  were 
in  process  of  construction.  By  the  provisions  of  the  law  of  1871  com- 
panies were  permitted  to  charge  passenger  rates  as  follows :  On  rail- 
roads not  exceeding  30  miles  in  length,  for  a  distance  not  exceeding  5 
miles,  25  cents ;  for  a  distance  not  exceeding  30  miles,  3£  cents  per 
mile.  For  the  transportation  of  property  the  same  rate  authorized  by 
the  charter  of  the  Michigan  Central  could  be  charged.  It  was  further 
provided  that  all  companies  should  transport  without  delay,  and  in  due 
order  of  time,  without  discrimination  except  as  to  classification,  all 
freight  offered  for  transportation  and  at  uniform  rates  per  mile;  pro- 
vided that  they  should  be  allowed  to  charge  and  collect,  in  addition  to 


INTERSTATE    COMMERCE.  35 

such  uniform  rates  per  mile,  for  a  distance  of  not  more  than  50  miles  100 
per  cent.,  for  a  distance  not  exceeding  25  miles  50  per  cent.,  and  for  a 
distance  not  exceeding  50  miles  25  per  cent.  The  restrictions  prohibit- 
ing the  legislature  from  reducing  tolls  until  the  annual  earnings  ex- 
ceeded 15  per  cent,  upon  the  amount  of  the  capital  stock  actually  paid 
in  were  continued  in  force. 

In  1870  the  following,  to  stand  as  a  new  article  of  the  State  consti- 
tution, was  ratified  by  the  people: 

.  The  legislature  may  from  time  to  time  pass  laws  establishing  reasonable  maxi- 
mum rates  of  charges  for  the  transportation  of  passengers  and  freights  on  the  differ- 
ent railroads  in  this  State,  and  shall  prohibit  running  contracts  between  such  rail- 
road companies  whereby  discrimination  is  made  in  favor  of  either  of  such  companies 
as  against  other  companies  owning  connecting  or  intersecting  lines  of  railroad. 

The  intent  of  this  last  clause  is  somewhat  ambiguous,  but  doubtless 
the  purpose  was  to  compel  all  roads  forming  parts  of  through  lines,  or 
in  case  of  shipments  from  one  road  to  another,  to  accept  each  their 
proportion  of  the  through  rate  according  to  the  uniform  charge  per 
mile  as  should  be  authorized  by  the  law. 

The  law  of  1871  was  repealed  by  the  legislature  of  1873,  and  its  pro- 
visions radically  changed  in  many  particulars.  The  rates  of  passenger 
fares  remained  practically  unaltered — 3  cents  per  mile,  except  in  cer- 
tain unimportant  cases  otherwise  provided  for,  and  of  no  general  im- 
portance. With  regard  to  freight  rates,  all  provisions  of  the  old  law 
were  repealed,  and  a  general  provision  adopted  instead,  authorizing  the 
companies  to  charge  and  collect  tolls,  subject  to  the  following  proviso, 
which  was  intended  to  enforce  the  provisions  of  the  constitution  above 
quoted : 

Provided,  That  in  transporting  freight  by  the  car,  loaded  by  the  shipper  and  un- 
loaded by  the  consignee,  no  railroad  company  shall  charge  for  transporting  each  of 
such  cars  more  than  eight  dollars  for  any  distance  not  exceeding  ten  miles,  nor  more 
than  fifty  cents  per  mile  for  the  second  ten  miles,  nor  more  than  twenty-five  cents 
per  mile  for  the  third  ten  miles;  and  for  distances  exceeding  thirty  miles  in  no  case 
shall  the  charge  between  any  two  points  on  the  said  railroad  exceed  the  minimum 
charge  on  the  entire  line.  This  provision  shall  not  apply  to  the  Upper  Peninsula,  nor 
to  any  company  operating  less  than  fifteen  miles  of  railroad. 

The  provision  authorizing  a  reduction  of  rates  when  the  earnings 
should  exceed  15  per  cent,  upon  the  capital  stock  was  not  re-enacted, 
and  the  authority  of  our  railroad  corporations  to  fix  their  own  freight 
rates,  except  as  limited  by  foregoing  proviso,  is  unrestricted.  The  leg- 
islature of  1870  added  a  new  section  to  the  law  of  1873,  forbidding  dis- 
criminations, which,  as  slightly  amended  by  legislation  in  1883,  reads 
as  follows,  and  comprises  all  the  legal  enactments  now  in  force  in  this 
State  with  regard  to  the  subject : 

All  railroad  corporations  shall  grant  equal  facilities  for  the  transportation  of  pas- 
sengers and  freight  to  all  persons,  companies,  or  corporations,  without  discrimination 
in  favor  of  any  individuals,  companies,  or  corporations,  and  shall,  at  all  points  of 
connection  or  intersection  with  the  roads  of  other  corporations,  unite  with  such  cor- 
porations in  establishing  and  maintaining  suitable  platforms  and  station  houses  for 
the  convenience  of  passengers  desiring  to  transfer  from  one  road  to  the  other,  and  for 
the  transfer  of  baggage  or  freight,  whenever  the  same  shall  be  desired  by  either  cor- 
poration or  ordered  by  the  commissioner  of  railroads;  the  expense  of  constructing 
and  maintaining  such  station  house  and  platform  shall  be  paid  equally  by  such  cor- 
porations. Such  corporations  connecting  or  intersecting  as  aforesaid  shall  also, 
whenever  desired  by  either  of  them  or  ordered  by  the  commissioner  of  railroads,  so 
unite  and  connect  the  tracks  of  said  several  corporations  as  to  permit  the  transfer 
from  the  track  of  one  corporation  to  the  other  of  loaded  or  unloaded  cars,  designated 
[designed]  for  transportation  upon  both  roads.  No  railroad  corporation  shall  in  any 
manner  discriminate  in  its  rates  of  freight  tariff  in  favor  of  any  individual,  company 


36  INTERSTATE   COMMERCE. 

or  corporation  doing  business  over  its  line  [of]  road,  and  shall  grant  the  sanie  rights 
and  privileges  to  all  shippers,  subject  to  the  same  rates  and  classification,  without  re- 
hate  or  any  other  special  privilege  or  rate  not  extended  to  all  other  shippers  in  the 
same  class  who  ship  a  like  quantity  or  quantities.  Any  railroad  corporation  refus- 
ing to  comply  with  any  of  the  provisions  of  this  section  shall  be  liable  to  a  penalty 
not  exceeding  five  hundred  dollars. 

Simple  and  comprehensive  in  its  requiieroents,  it  seems  to  have  ac- 
complished the  purpose  for  which  it  was  desi  gned,  and  since  its  enactment 
not  more  than  five  complaints  ha^e  reached  the  commissioner  of  a  vio- 
lation of  its  provisions.  At  the  last  session  of  our  legislature  (1885)  a 
bill  for  a  law  similar  in  its  provisions  and  penalties  to  that  now  in  force 
in  the  State  of  Illinois  for  the  prevention  of  extortions  and  discrimina- 
tions was  introduced  and  exhaustively  considered,  but  after  having 
passed  the  Senate  and  gone  to  the  lower  house  for  its  action  was  re- 
called by  the  former  and  tabled,  where  it  remained  at  the  close  of  the 
session. 

The  legislature  of  1873  also  passed  an  act  providing  for  the  appoint- 
ment of  a  commissioner  of  railroads,  and  defining  his  powers.  The 
latter  are  mostly  supervisory  in  their  character,  looking  to  the  enforce- 
ment of  police  regulations,  the  inspection  of  railroad  properties,  the 
computation  of  the  specific  taxes  upon  gross  earnings  required  by  our 
laws,  and  the  exaction  of  annual  reports  from  the  companies,  so  that 
the  commissioner  in  turn  shall  be  able  to  report  to  the  governor  each 
year  the  condition  of  the  property  and  affairs  of  each  railroad  corpora- 
tion doing  business  in  the  State.  He  has  no  authority  to  revise  or  in  any 
manner  whatever  to  interfere  with  traffic  rates,  his  only  duty  in  that 
connection  being  covered  by  the  following  provision  of  the  act  creating 
his  office : 

Said  commissioner  shall,  on  or  before  the  first  day  of  January  in  each  year,  and 
oftener  if  required,  make  a  report  to  the  governor  of  his  doings  for  the  preceding  year, 
or  for  the  time  intervening  since  his  last  report,  containing  such  facts,  statements,  and 
explanations  as  will  disclose  the  actual  workings  of  the  system  of  railroad  trauspor- 
tion  of  freight  and  passengers,  and  its  bearings  upon  the  business  prosperity,  personal 
convenience,  and  safety  of  the  people  of  the  State,  with  such  suggestions  in  relation 
thereto  as  to  him  may  seem  appropriate,  and  particularly  whether  a  classification  of 
freights  can  be  made*,  and  if  so,  in  what  manner;  also  whether  any  railroad  corpora- 
tions make  any  discrimination  in  the  matter  of  freights  between  points  intersected 
by  competing  lines  and  points  not  so  intersected,  and  what,  change  should  be  made 
in  the  law  to  promote  the  interests  of  railroads  and  the  public.  He  shall  also,  at  such 
times  as  the  governor  shall  direct,  or  at  any  oilier  time  he  (the  said  commissioner) 
shall  deem  advisable,  examine  any  particular  subject  connected  with  the  condition  and 
management  of  railroads,  and  report  to  the  governor,  in  writing,  his  opinion  and 
doings  thereon  and  his  reasons  therefor ;  all  of  which  reports  shall  be  laid  before  the 
Legislature  at  its  next  regular  or  special  session  thereafter. 

From  the  foregoing  history  of  legislation  on  the  subject  of  railroad 
control  in  this  State,  made  at  your  suggestion,  and  with  as  much  con- 
ciseness as  an  appreciable  statement  will  allow,  you  will  perceive  that 
our  legislation  has  been  of  a  conservative  character,  and  seemingly 
based  upon  the  principle  of  reciprocity  of  interests  between  the  people 
and  the  corporations,  with  the  conviction  that  enactments  oppressive 
to  the  latter  would  surely  work  to  the  detriment  of  the  former. 

What  the  results  flowing  from  the  policy  adopted  in  Michigan  hav° 
proved  you  will  be  best  able  to  judge  from  the  following  tables  of  traf- 
fic operations  of  companies  doing  business  in  the  State,  compiled  from 
the  records  of  this  department  for  ten  years  commencinsr  with  1874, 


INTERSTATE    COMMERCE. 
PASSENGER  TRAFFIC. 


37 


Tear. 

Miles  oper- 
ated. 

Total  earnings. 

Total  number 
of  passengers 
carried. 

Total  number  of 
passengers  car- 
ried onb  mile. 

Average 
rate  per 
mile. 

1874         

5,  278.  36 
5,311.77 
5,  387.  25 
6,  436.  28 
6,  039.  53 
6,  166  71 
6,  427.  34 
11,  528.  79 
12,  513.  23 
14,  043.  01 

$12,  537,  230  74 
11,590,894  00 
11,263,942  94 
10,  255,  365  36 
10,  447,  268  38 
10,  972,  289  24 
13,  336,  478  25 
18,473,153  71 
22,  761,  294  24 
24,  179,  325  30 

10,207,416 
10,  716,  227 
'    10,J:i8,  718 
9,  944,  848 
10,615,501 
11,055,617 
1!),  507,  200 
18,  914,  933 
24,  158,  093 
25,312,275 

420,  077,  000 
421,  272,  314 
473,  007,  640 
404,  £O.  i>7« 
414,608,252 
447,  402,  532 
561,  982,  824 
824,  103,  330 
967,401,776 
1,025,680,909 

Cents. 
2.60 
2.49 
2.38 
2.54 
2.52 
2.45 
2.69 
2.38 
2.72 
2.72 

1875  

1876  

1877    

1878  

1879  

1880  

1881         

1882  

1883  

FREIGHT  TRAFFIC. 


Tear. 

Miles  oper- 
ated. 

Total  earnings. 

Total    tons 
carried. 

Total  tons  car- 
ried one  mile. 

Rate  per 
ton  per 
mile. 

1874  

5  278.  36 

$31,071  r.91  01 

14,  260,  052 

1  963  506  467 

Cents. 
1.37 

1875                    .            ... 

5  311  77 

27  35::  7->7  33 

14  651  137 

1  954  003  452 

1  20 

1876 

5  387  25 

26  945  752  20 

16  474  721 

2  3^3  961  690 

982 

1877      

5  436.28 

27  226  230  30 

16  489  211 

2  292  655  424 

L032 

1878  

6  039.53 

30,121  618  70 

19  930  642 

2  85ft  931  229 

1.  053 

1879  

6,  166.71 

33,080  934  95 

24  ''48  899 

3  598,  676  485 

.920 

1880  

6  427.34 

41,  234  027  64 

26,  830,  550 

4,  789,  420,  773 

.864 

1881  

11,  528.  79 

53,  239,  707  02 

37,  779,  555 

5,  753*  0'_'9,  737 

1.13 

1882 

12  513  25 

56  198  GV>  14 

39  400  806 

5  781  580  167 

973 

1883         .  .            

14.  043.  01 

62  044,  908  27 

37  104,324 

0  235  081  222 

.999 

THE  REGULATION  OF  WATER  ROUTES. 

Referring  to  your  suggestion  as  to  whether  any  law  of  Congress  for 
the  regulation  of  inter- State  traffic  by  rail  should  apply  to  the  water 
routes  as  well,  we  have  no  hesitancy  in  saying  that  it  should  not.  In 
the  fact  that  for  at  least  six  months  of  each  year  the  rates  by  water 
will  give  to  the  entire  Northwest  and  the  Mississippi  Valley  the  cheap- 
est and  for  freight  in  bulk  the  best  transportation,  we  must  recognize 
the  most  effective  factor  in  the  determination  of  the  whole  traffic  ques- 
tion in  the  territory  adjacent  to  our  inland  waters./  Eestriction  bylaw 
upon  the  absolute  freedom  of  commerce  upon  those  waters  would  prove 
hardly  less  disastrous  to  the  great  business  interests  of  this  country 
than  would  similar  obstructions  enforced  (were  it  possible)  upon  the 
high  seas  to  the  maritime  trade  of  the  world. 

THE  GRAND  TRUNK  RAILWAY. 

With  regard  to  the  Grand  Trunk  Railway  of  Canada,  which,  as  you 
observe,  begins  and  ends  in  the  United  States  but  is  mainly  in  the 
Dominion,  from  considerable  familiarity  with  the  conditions  attending 
the  operation  of  that  road  we  do  not  think  that  there  are  any  elements 
of  advantage  in  its  situation  that  demand  adverse  legislation  in  the 
interest  of  American  lines.  While  it  is  true  that  the  portion  of  the 
Grand  Trunk  located  outside  our  national  jurisdictiou  is  beyond  tho 
reach  of  law's  that  we  may  enact  for  the  regulation  of  inter-State  com 
merce,  we  see  no  reason  for  believing  that  such  fact  would  be  relict1 
upon  (even  if  available)  by  the  foreign  corporation  as  a  disturbing  elc» 


38  INTERSTATE    COMMERCE. 

merit  in  the  fair  adjustment  of  the  through  rates.  It  must  not  be  for- 
gotten that  the  Grand  Trunk  has  been  constructed  and' equipped  at  a 
larger  cost  per  mile  than  almost  any  other  road  of  single  track  in  the 
country.  The  money  for  the  work  has  been  furnished  by  actual  share- 
holders, whose  only  chance  of  securing  a  return  upon  the  vast  capital 
invested  is  by  maintaining  rates  and  not  depressing  them.  Indeed,  we 
are  unable  to  discover  that  the  Grand  Trunk  management,  if  less  dem- 
onstrative, have  not  in  fact  been  more  conservative  in  its  action  with 
regard  to  traffic  polity  than  some  of  its  neighbors  within  the  States 
who  frequently  are  not  slow  in  charging  the  Canadians  as  the  authors 
of  all  the  eruptions  in  a  traffic  way  that  the  railroad  world  is  heir  to. 

The  physical,  disadvantages  attending  the  operation  of  the  Grand 
Trunk  are  apparent.  The  region  which  its  line  traverses  is  character- 
ized by  long,  cold  winters,  and  a  store  track  upon  the  lower  end  of  the 
road,  containing,  it  is  said,  about  a  mile  of  snow  plows,  speaks  more 
forcibly  than  words  of  the  cost  and  difficulty  of  keeping  the  road  open 
for  winter  traffic.  To  this  last  disadvantage  add  the  fact  that  the  largest 
per  cent,  of  its  through  busiuess  must  be  derived  from  a  people  disposed 
from  habit  and  tradition  to  patronize  their  own  institutions  rather  than 
those  of  foreign  neighbors,  and  we  must  conclude  that  the  Grand  Trunk, 
if  left  upon  an  equal  footing  with  our  own  roads,  will  not  prove  an  ob- 
stacle in  the  way  of  desirable  rates  for  our  inter-State  commerce. 

DISCRIMINATION  AND  EXTORTION. 

Referring  to  the  subjects  of  inquiry  suggested  in  the  circular  from 
your  committee  under  date  of  April  6,  ultimo,  this  Commission,  without 
expecting  to  add  much  to  the  weight  of  opinion  already  elicited  from 
the  prominent  representatives  of  railroad  and  other  commercial  inter- 
ests, who  have  responded  to  your  call  for  information,  will  briefly  allude 
to  some  of  the  more  important,  questions  presented. 

First.  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  dis- 
criminations by  corporations  engaged  in  inter-State  commerce. 

From  a  somewhat  critical  examination  of  the  reports  of  the  traffic 
operations  of  railroad  companies  that  reach  this  office  from  other  States, 
as  well  as  from  observation  in  our  own,  we  confess  that  we  see  but  little 
evidence  to  establish  the  fact  that  such  practices  prevail  to  an  appreci- 
able extent.  It  is  probably  true  that  large  amounts  of  freight  are  moved 
for  much  less  than  the  service  is  justly  worth  or  can  be  afforded.  It  is 
also  true  perhaps  that  much  other  freight  of  similar  character  has  under 
different  conditions  been  charged  a  higher  rate  over  the  same  roads, 
but  we  are  impressed  with  the  conviction  that  for  several  years  past 
the  instances  of  excessive  or  unjust  rates  realized  by  railroad  compa- 
nies are  exceedingly  rare.  Indeed,  general  complaint  seems  to  be  not 
so  much  of  discrimination  between  shippers  as  between  localities  dif- 
ferently situated  as  regards  the  presence  of  competitive  roads.  Unques- 
tionably there  is  some  ground  for  complaint  in  the  latter  particular, 
but  not  so  much  as  is  generally  supposed.  In  most  parts  of  the  country 
parallel  roads  run  so  closely  to  each  other  through  contiguous  territory 
that  stations  upon  each  are  competitive  with  the  other,  and  traffic  rates 
are  affected  by  .such  circumstances  almost  as  sensibly  as  though  such 
points  were  situate  at  the  intersections  of  competing  lines.  To  a  farmer 
with  a  load  of  produce  on  his  wagon  the  difference  of  a  few  miles  in- 
creased haul  does  not  weigh  much  as  against  a  few  cents  better  price, 
and  he  will  make  his  way  to  the  market  most  favorably  situated  in  that 


INTERSTATE    COMMERCE. 


39 


regard.     Such  fact  is  well  understood,  and  gives  competing  points  at 
stations  oftentimes  ten  to  twenty  miles  apart  on  parallel  lines. 

Impressed  tvith  the  correctness  of  such  conclusion,  this  Department  last 
year  selected  upon  the  line  of  eight  of  our  principal  roads  four  stations, 
each  more  nearly  non-competitive  from  location  than  any  others  upon  the 
respective  lines.  From  such  companies  we  required,  without  previous 
notice,  statements  of  total  traffic  of  freight  forwarded  for  the  months  of 
January  and  June  from  the  stations  selected.  The  subjoined  recapitu- 
lation of  results,  cut  from  our  report  for  1884,  conclusively  shows  that 
as  a  rule  the  freight  rate  is  much  more  evenly  adjusted  between  stations 
than  is  generally  believed.  Occasionally  a  point  with  small  tonnage 
and  short  haul  pays  a  higher  average  rate  than  its  neighbors  with  heavier 
traffic,  but  it  is  theresultof  well  established  principles  of  traffic  that  no 
legislation  can  change. 

RECAPITULATION  showing  toial  traffic  of  freight  forwarded  from  four  non-competitive  sta- 
tions <>n  each  of 'lite  railroads  below  named  in  the  State  of  Michigan  during  the  months  of 
January  and  June,  1884. 


Name  of  road. 

Tons. 

Tons  car- 
ried one 
•     mile. 

Average 
haul. 

Earnings. 

Average 
rate  per  ton 
per  mile. 

Chicago  and  Grand  Trunk  

2,  569 
3ft,  955 

1S9,  094 
3,719.1^9 
4-JS.  305 
4>9,  *61 
946,  591 
1,  985,  641 
1,873,354 
519,  802 

Miles. 
73.60 
103.  33 
78.-17 
75.39 
100.  34 
166.  83 
202.  90 
111.95 

$4,215  82 
42,680  11 
9,  385  82 
10,966  19 
16.081  34 
29,  849  (56 
16,616  68 
8,  963  Q3 

Cents. 
2.23 
1.15 
2.09 
2.24 
1.69 
1.50 
0.887 
1.72 

Chicago  and  West  Michigan     

Detroit  ,  Grand  Haven  and  Milwaukee  .  . 

5,735 
6,437 
9,434 
11,  9u2 
9,232 
4,643 

Grand  Rapids  and  Indiana  

Lake  Shorn  and  Michigan  Southern  
Michigan  Central  

Totals  

86,  007 

10,  172,  037 

118.  27 

138,  767  65 

1.36 

From  the  foregoing  statement  it  will  be  seen  that  the  average  rate 
per  ton  per  mile  for  tbfe  stations  included  by  the  figures  was  1.36  cents, 
or  thirty-seven  ImndmUhs  only  in  excess  of  the  average  freight  rate 
for  all  the  stations  in  the  State.  Certainly  not  a  very  j.reat  difference, 
when  it  is  considered  that  the  traffic  from  the  stations  named  was 
largely  local. 

The  views  here  presented  with  reference  to  the  first  question  sug- 
gested jn  the  circular  apply  to  the  second,  and  we  see  no  reason  for  be- 
lieving that  the  rates  generally  charged  by  the  railroads  of  the  country 
for  local  as  well  as  through  traffic  are  unreasonable,  and  as  a  rule  un- 
favorable to  the  shippers  rather  than  to  the  corporations. 

PUBLICITY   OF    RATES   SHOULD  BE   REQUIRED. 

We  are  of  the  opinion  that  publicity  of  rates  should  be  required  by 
law,  and  that  in  all  cases  of  increase,  at  any  rate,  and  generally  in  those 
of  reduction,  changes  should  not  be  made  without  reasonable  notice  to 
the  public.  In  case  of  reduction  it  will  sometimes  happen  that  a  road 
forming  part  of  a  through  competing  line  will  be  obliged,  in  order  to 
meet  a  cut  rate  by  its  competitor,  to  accept  a  smaller  proportion  of  the 
through  rate  and  to  modify  its  own  tariff  accordingly.  As  such  exi- 
gencies are  frequently  of  sudden  and  unforeseen  occurrence,  an  iron- 
clad rule  that  required  previous  notice  of  all  reductions  would  work  a 
hardship,  and  an  exception  to  the  requirement  should  probably  be  con- 
'«ded  under  such  circumstances,  but  immediate  notice  to  the  public  of 


40  INTERSTATE    COMMERCE. 

such  reduction  to  be  insisted  upon,  immediately  it  is  made.  But  all 
changes  of  tariff  rates  to  be  made  at  a  day  certain  in  the  future  should 
be  given  to  the  public  a  reasonable  time  before  the  same  take  effect. 
Otherwise  it  is  easy  to  perceive  that  some  shippers  and  operators  upon 
the  market  in  the  confidence  of  traffic  managers  might  have  greatly 
the  advantage  of  others  who  were  not.  No  better  method  of  securing 
uniformity  and  stability  of  rates  can  be  devised  than  to  have  all  ship- 
pers thoroughly  informed  as  to  current  established  classification  and 
rates,  and  in  position  to  understand  if  the  same  are  dispensed  without 
favor  or  partiality  to  all. 

MAXIMUM  AND  MINIMUM  RATES. 

As  to  the  advisability  of  establishing  maximum  and  mimimum  rates 
for  the  transportation  of  inter-State  commerce  so  far,  experience  in  the 
States  indicates  that  it  is  impracticable  to  do  it,  at  least  upon  a  basis 
that  works  no  injustice  or  hardship  upon  certain  of  the  roads  to  be 
affected  by  the  determination  of  the  rate.  So  many  elements  must 
necessarily  enter  into  the  consideration  of  the  justness  of  a  maximum 
rate  that  might  be  fixed  for  a  particular  road  that  it  makes  it  almost 
requisite  that  each  must  stand  on  its  own  bottom  in .  that  particular. 
Scarcely  any  two  are  alike  situated  in  the  matter  of  fixed  charges,  in 
plant,  in  location,  alignment,  gradients,  and  cost  of  .maintaining  and 
operating,  and,  most  important  of  all,  in  the  volume  of  traffic  passing 
over  their  tracks — all  important  factors  in  determining  the  question 
of  rates.  Nor  must  it  be  forgotten  that  the  cost  of  maintenance  and 
operating  will  vary  from  year  to  year  according  to  the  character  of  the 
seasons  and  the  increasing  age  of  the  road  and  its  equipment,  so  that 
the  margin  necessary  for  extraordinary  expenditures  must  all  the  time 
be  remembered  and  provided  for.  It  is  easy  to  see  that  these  compli- 
cations and  inequalities  would  be  largely  increased  in  cases  of  long 
through  lines  traversing  diversified  regions  of  country,  making  it  still 
more  difficult  to  so  graduate  rates  that  each  section  of  the  line  would 
realize  that  warranted  by  its  own  peculiar  situation. 

It  is  probable  that  to  some  extent  the  difficulty  could  be  surmounted 
by  grouping  roads  of  similar  cost  and  capacity  and  volume  of  traffic 
in  an  arrangement  for  rates ;  but  in  view  of  the  obstacles  above  cited  it 
is  very  questionable  whether  legislation  for  the  purpose  of  enforcing 
maximum  or  minimum  rates  of  transportation  would  prove  of  practical 
utility. 

THE  PROPER  BASIS  OF  RATES.' 

In  fixing  tariffs  on  railroad  traffic  the  elements  of  cost  to  be  considered 
are  properly  classified  as  follows : 

1.  The  cost  of  movement  of  trains,  which,  of  course,  covers  simply  the 
service  and  supplies  requisite  therefor.  2.  The  maintenance  of  the 
property.  3.  General  expenses  and  fixed  charges. 

As  a  matter  of  correct  theory  each  class  of  traffic  should  contribute 
a  proportion  to  the  total  cost  for  movement,  maintenance  and  general 
expenses,  and  fixed  charges.  Otherwise  some  classes  will  bear  an  un- 
due share  of  such  cost,  or  a  deficiency  in  revenue  to  expenditures  fol- 
lows. While  the  rule  should  ordinarily  prevail  that  no  business  should 
be  done  for  the  mere  cost  of  movement,  it  would  hardly  do  to  say  that 
sound  policy  would  not  sometimes  warrant  a  departure  from  its  require- 
ments. A  heavy  surplus  product  and  low  market  prices  at  the  com- 
mercial centers  making  it  impossible  to  move  such  surplus  at  a  rate 


INTERSTATE    COMMERCE.  41 

much  bey oiid  the  mere  cost  of  movement  without  a  serious  loss  to  the 
producers  would  seem  to  justify  a  very  low  special  rate  to  meet  the 
emergency,  rather  than  to  invite  the  stagnation  in  other  business  chan- 
nels that  would  follow  inactivity  in  railroad  transportation.  While  in 
such  case  it  is  true  that  shippers  in  other  classes  of  traffic  than  that 
favored  with  the  special  rate  would  pay  higher  tolls  in  order  to  keep 
earnings  up  to  the  sum  necessary  to  cover  expenditures,  still  such  in- 
crease would  be  added  to  the  price  of  the  commodities  in  which  they 
dealt,  and  the  burden  of  it  be  divided  among  consumers,  among  whom 
would  doubtless  be  a  considerable  portion  of  the  number  to  whom  had 
been  accorded  the  low  rate  in  the  original  instance.  And  in  that  way 
the  traffic  rate  would  be  equalized  among  all. 

REBATES  DEMORALIZING  AND  UNFAIR. 

The  system  of  rebates  and  drawbacks  now  generally  practiced  on  our. 
American  roads  has  nothing  to  commend  it  to  favor,  and  should  be 
abrogated  as  promptly  as  possible.  It  is  the' medium  through  which 
discrimination  exists  and  regular  rates  are  discarded.  Demoralizing  in 
its  tendencies  and  unfair  in  its  purpose,  the  laws  of  many  of  the  States 
prohibit  by  heavy  penalties  the  practice  of -giving  rebates  to  favored 
shippers;  but  unfortunately  such  laws  have  not  been  as  rigidly  enforced 
as  they  ought  to  have  been,  and  impairment  of  fair  tariff  rates  has  re- 
sulted. !Not  only  is  the  system  a  ruinous  one  in  itself,  but  is  also  main- 
tained at  vast  expense  by  the  railroad  companies  that  further  it.  A 
person  not  familiar  with  the  adjustment  of  rebate  and  drawback 
vouchers  between  the  companies  charged  with  proportions  has  little 
idea  of  the  cost  attendant  upon  the  process. 

All  freights  should  be  billed  straight  at  the  figures  at  which  they  are 
actually  to  be  carried  from  point  of  shipment  to  place  of  destination, 
and  if  to  pass  over  more  than  one  road  such  billing  should  be  upon 
coupon  bills  so  devised  as  to  show  the  exact  amount  that  each  company 
is  to  collect  for  its  propoition  of  the  transportation.  All  rebates  as  a 
concession  from  tariff  rates  should  be  absolutely  prohibited,  and  no 
drawbacks,  except  in  case  of  actual  error  in  billing  or  classification, 
should  be  allowed. 

POOLING  CONTRACTS. 

With  regard  to  the  efficiency  of  pooling  contracts  between  railroads 
organized,  as  it  is  claimed,  "for  the  purpose  of  establishing  proper 
tariffs  and  strickly  maintaining  them,"  there  is  a  great  difference  of 
opinion.  If  the  purpose  of  pooling  contracts  is  certainly  in  the  inter- 
ests of  the  roads,  and  the  observance  of  their  terms  can  only  result  to 
their  benefit,  why  should  there  be  need  of  legislative  interference  for 
the  enforcement  of  good  faith  between  companies  in  such  compacts 
with  each  other  ?  While  it  is  true  that  the  courts,  in  the  absence  of 
special  legislation,  would  hesitate  before  enforcing  contracts  of  that 
character  between  the  corporations  as  being  against  public  policy,  inas- 
much as  they  tend  to  create  monopoly,  nevertheless,  why  the  necessity 
of  invoking  the  interference  of  the  courts  at  all  for  the  enforcement  of 
agreements  resulting  only,  it  is  insisted,  in  the  best  interest  of  the  par- 
ties concerned  ?  If  it  really  is  for  their  best  interest,  why  should  recal- 
citrant companies  oblige  the  necessity  of  judicial  proceedings  to  restrain 
them  from  doing  hurt  to  themselves  ? 

And  what  assurance  is  there,  even  with  the  legislative  sanction  of 
railroad  pools,  that  the  situation  would  be  far  different  from  what  it  is 


42  INTERSTATE    COMMERCE. 

without  such  sanction,  or  any  great  advantage  to  be  secured  to  the 
public  that  it  does  not  already  enjoy  f  If  a  mere  observance  of  tariff 
rates  is  all  there  is  requisite  to  secure  to  each  of  the  railroad  corpora- 
tions doing  business  in  the  country  its  fair  proportion  of  traffic,  it  would 
appear  that  nothing  more  is  left  to  be  desired. 

The  laws  of  nearly  all  the  States  leave  them  free  to  make  their  own 
classifications,  and  to  establish  their  own  rates  thereon,  and  each  to  take 
the  trade  that  comes  to  it  from  its  own  territory,  leaving  to  other  lines 
that  which  naturally  comes  to  them.  But,  as  we  know,  pur  railroad 
companies  as  a  rule  adopt  no  such  policy.  They  cut  and  sear  and  in- 
vade each  other's  fields,  and  by  all  the  arts  known  to  the  shrewd  scalpers 
in  their  employ  build  up  large  tonnage  at  the  expense  of  income.  For 
several  years  past  most  of  the  trunk  lines  of  the  country  have  belonged 
to  associations  organized  for  pooling  purposes.  The  outcome  of  them 
has  been  far  from  a  success,  and  as  a  rule  discordance  and  dissensions 
have  characterized  their  history.  It  would  be,  perhaps,  too  much  to 
say  that  they  had  achieved  no  good  at  all,  but  no  permanent  good  to 
the  public,  at  least,  has'  resulted.  But  the  fact  is  that  nearly  if  not  all 
the  members  of  these  associations  have  in  turn,  when  their  interests 
seemed  to  require  it,  suspended  their  relations  to  the  pool  arid  cut  the 
rates  at  their  discretion,  to  return  again  when  concessions  made  influ- 
enced them  to  that  course. 

These  facts  lead  to  the  suspicion  that  it  is  possible  the  difficulty 
sought  to  be  corrected  is  not  within  the  control  of  pools,  or  even  of  leg- 
islation, but  will  only  be  remedied  by  time  and  a  better  appreciation 
of  the  necessity  on  the  part  of  the  railroad  companies  of  keeping  faith 
with  each  other,  and  a  strict  adherence  to  those  principles  of  trade  that 
must  apply  to  railroad  traffic,  as  well  as  to  other  departments  of  busi- 
ness, before  success  can  be  assured. 

With  the  close  of  the  financial  and  business  depression  commencing 
in  1873  the  building  of  railroads  in  the  United  States  received  an  im- 
petus unparalleled  in  the  history  of  any  other  country^  Lines  were 
projected  and  completed  without  reference  to  the  consideration  of  the 
question  of  whether  they  were  warranted  by  location  or  the  traffic 
needs  of  the  country  through  which  constructed.  The  ease  with  which 
municipal  aid  could  be  secured  to  such  enterprises,  and  the  facility 
with  which  the  bonds  issued  for  the  purchase  of  steel  and  rolling  stock 
could  be  negotiated,  greatly  stimulated  railroad  schemes.  In  other 
cases  important  roads  with  remunerative  traffic  were  paralleled,  with 
the  sole  intent  of  compelling  their  owners  to  purchase  at  heavy  cost  the 
road  last  built,  rather  than  permit  it  by  ruinous  competition  to  imperil 
the  capital  already  invested. 

The  outcome  of  this  has  been  that  railroad  construction  is  far  in  ad- 
vance of  the  actual  needs  of  the  public,  and  the  total  traffic  of  the 
country  is  insufficient  to  afford  remunerative  returns  upon  the  capital 
invested.  In  other  words,  the  demand  for  freights  is  far  in  excess  of 
the  supply,  and  it  is  not  easy  to  perceive  how  Congressional  or  other 
•legislation  is  to  remedy  the  deficiency.  In  railroad  traffic,  as  in  other 
departments  of  business,  the  relative  supply  to  the  demand  must  regu- 
late the  price  of  transportation,  the  same  as  it  does  that  of  the  com- 
modity carried.  Add  to  this  the  further  circumstance  that  many  of 
the  roads  have  been  capitalized  per  mile  far  beyond  their  capacity  under 
the  most  favorable  circumstances  of  yielding  a  fair  or  any  return  to 
their  owners,  and  the  reason  of  the  fierce  and  disastrous  railroad  wars, 
which  it  is  sought  to  terminate,  becomes  apparent,  and  the  remedy 
proposed  by  those  who  favor  the  enforced  compliance  with  pooling  con- 


INTERSTATE   COMMERCE.'  43 

tracts  strikes,  as  it  seems  to  us,  at  the  results  of  such  wars,  rather  than 
at  the  causes  from  which  they  originate.  It  is  an  "  irrepressible  con- 
flict" maintained  by  certain  of  the  companies  with  the  purpose  in  view 
of  securing  advantages  to  themselves  at  the  expense  of  the  others,  and 
by  the  latter  in  the  endeavor  of  recouping  losses  sustained  in  the  un- 
equal contest  which  they  are  forced  to  maintain. 

Through  the  medium  of  expensive  systems  of  agencies,  planted  either 
by  the  corporations  themselves,  or,  more  frequently,  by  the  fast  freight 
lines  (parasites  that  are  consuming  the  substance  of  the  freight  busi- 
ness of  numbers  of  our  roads),  most  of  the  traffic  is  reached  where  it 
originates ;  is  diverted  in  many  instances  from  the  natural  parallel  on 
which  it  should  move  to  the  centers,  where  competition  is  the  most  act- 
ive, finally  to  reach  destination  over  the  line  willing,  however  little 
able,  to  accept  the  lowest  proportion  of  the  through  rate. 

That  such  methods  are  ruinous  to  the  railroads,  and  the  manner  in 
which  the  slender  earnings  derived  from  them  are  proportioned  among 
the  corporations  that  practice  them,  are  not  so  much  matters  of  interest 
to  the  people  as  their  right  to  have  equable  rates  aud  reasonable  ones, 
is  evident — such  rates  as  will  result  from  a  competition  sufficient  to 
stimulate  traffic,  but  not  ruin  the  companies  engaged  in  it.  Legislation 
that  would  impair  such  right  would  be  more  disastrous  to  commerce 
than  are  the  evils  incident  to  the  present  complications.  And  right 
here,  in  our  judgment,  is  the  point  where  the  danger  of  legalizing  pools 
is  to  be  apprehended.  It  is  easy,  by  state*!y  array  of  figures  and  plausi- 
ble distribution  of  proportions,  to  indicate  how  the  compelling  of  rail- 
road corporations  to  observe  pooli  ug  contracts  would  redound  to  their 
benefit,  but  what  the  real  effect  of  such  a  policy  would  be  upon  tariff 
rates  and  the  real  interests  of  the  people  must  not  be  lost  sight  of  in 
the  mysticism  of  a  merely  technical  consideration  of  the  subject. 

•  For  some  years  the  tendency  has  been  in  the  direction  of  the  absorp- 
tion of  the  less  important  roads  by  the  greater,  and  the  reorganization 
of  the  principal  systems  leading  eastwardly  from  the  Mississippi  Valley 
and  thv  lakes,  with  reference  to  their  connections  with  the  great  thorough- 
fares to  the  Pacific  now  competing  for  the  transcontinental  trade. 
While  it  has  been  the  settled  policy  in  most  of  the  States  for  some  years 
past  to  inhibit  the  consolidation  of  parallel  or  competing  lines  of  rail- 
road, experience  has  demonstrated  that  laws  having  that  object  in  view 
practically  amount  to  but  little.  Notwithstanding  there  may  be  duality 
of  corporate  organization,  through  ownership  of  stock  or  lease  of  prop- 
erty, there  may  be,  aud  frequently  is,  unity  of  interest  in  everything 
appertaining  to  the  management  of  nominally  competing  lines.  In  the 
opinion  of  many  thoughtful  men  the  day  is  not  far  distant  when  our  prin- 
cipal railroad  properties  will  be  under  the  control  of  not  to  exceed  half 
a  dozen  competing  companies,  with  their  systems  extending  from  the 
Atlantic  to  the  Pacific.  In  such  an  event,  would  not  the  authority  of 
the  law  compelling  inter  State  roads  to  abide  by  their  traffic  contracts 
with  each  other  be  the  cover  under  which  the  great  consolidated  com- 
panies would  practically  have  the  traffic  rates  of  the  entire  country  at 
their  control?  It  is  easy  to  insist  that  additional  legislation  would  at 
any  time  correct  any  evils  that  might  spring  from  the  legalization  of 
pools,  but  does  not  all  experience  prove  that  corporate  power,  fortified 
in  its  position  by  those  influences  that  it  so  well  knows  how  to  exert, 
is  not  easily  deprived  of  franchises  once  granted,  however  oppressive 
to  the  public  their  exercise  may  prove  «,'  Were  Congress  in  a  position 
to  incorporate  the  inter  State  roads  and  limit  their  franchises  by  proper 
restrictions  through  their  entire  length,  the  situation  would  be  far  dif- 


44  INTERSTATE    COMMERCE. 

ferent.  Or  if,  in  the  case  of  corporations  whose  properties  traverse  dif- 
ferent States,  by  virtue  of  consolidations,  made  pursuant  to  the  laws  of 
such  States,  Congress  has  the  power  to  regulate  the  tariff  of  charges  to 
be  made  by  such  consolidated  companies,  by  reason  of  their  being  in- 
ter State  roads,  doubtless  it  would  sometimes  be  in  the  interest  of  the 
people  that  such  power  should  be  exercised,  so  far  as  necessary,  to  pre- 
vent discriminations  in  favor  of  points  without  a  State,  as  against  a  point 
within,  and  both  equidistant  from  the  same  shipping  point  on  the  same 
line  of  road. 

But  of  necessity  the  railroad  corporations  are  largely  the  creatures 
of  the  States  where  they  exist.  Their  local  traffic  must  be  regulated  by 
the  laws  of  such  States,  and  the  regulations  for  inter-State  rates  should 
be  in  harmony  therewith,  and  it  is  very  questionable  whether  any  effort 
upon  the  part  of  Congress  to  interfere  with  the  subject  at  all  will  not 
add  to  the  difficulties  already  surrounding  the  solution  of  the  problem. 

If  left  to  work  itself  out  consistently  with  those  fundamental  principles 
of  supply  and  demand  that  no  legislation  has  ever  been  able  to  affect; 
with  laws  to  prevent  the  building  of  additional  roads,  not  required  by 
the  public  need  ;  with  traffic  left  to  move  on  its  own  natural  parallels 
without  diversion  by  prenicious  methods;  with  fewer  proprietorships, 
better  roads,  less  expenses  for  general  management,  less  or  no  free  trans- 
portation, and  each  road  with  the  traffic  that  fairly  belongs  to  it,  and 
finally,  as  the  resultant  of  all  these  conditions,  with  honesty  and  good 
faith  between  the  corporations  themselves,  there  would  seem  to  be  but 
little  reason  for  the  legislation  urged  by  the  friends  of  the  pooling  sys- 
tem, as  a  prominent  feature  in  the  policy  to  be  adopted  for  the  regula- 
tion of  our  inter- State  traffic. 

THE  DIVERSION  OF  FREIGHT. 

The  right  of  the  shipper  to  name  at  the  original  point  of  shipment 
the  route  which  his  property  should  take  to  place  of  destination  would 
seein  to  be  undeniable.  But  if  a  shipper  should  elect  to  divert  his  con- 
signments from  some  point  short  of  destination  to  the  road  of  a  com- 
peting line,  he  certainly  should  not  expect  to  carry  his  freight  to  such 
point  of  diversion  at  the  proportionate  part  of  the  through  rate  agreed 
upon  at  the  place  of  shipment.  Where  two  or  more  roads  compose  a 
through  line,  the  proportion  of  the  through  rate  which  each  will  receive 
will  depend  largely  upon  the  volume  of  the  traffic  it  can  deliver  to  the 
others  for  through  transportation.  Therefore,  to  deliver  line  traffic  to 
a  competing  road  for  transportation  at  a  less  proportion  than  would 
have  been  earned  by  its  associate  road  in  the  through  line,  would  be  a 
breach  of  faith  that  no  law  ought  to  tolerate,  much  less  to  legalize.  If 
several  roads  were  associated  with  a  trunk  line  as  part  of  a  through 
route,  at  the  same  rate  to  the  same  point  of  destination,  it  would  seem 
that  under  such  circumstances  the  shipper  should  have  the  right  to 
elect,  if  for  any  reason  he  has  a  preference  of  the  routes  embraced  by 
the  pool,  which  route  his  property  should  take.  The  dispatch  with 
which  freights  are  to  reach  market  is  often  a  matter  of  great  importance 
to  a  shipper,  and  to  send  shipments  over  the  less  direct  route,  in  order 
that  the  tonnage  may  be  equalized  between  the  members  of  a  pool, 
would  hardly  seem  to  be  justified  by  the  principles  of  fair  dealing. 

In  our  opinion,  as  before  stated,  uniform  systems  of  rates  for  the  trans- 
portation of  passengers  and  freight  can  be  best  secured  by  first  adopting 
reasonable  classification  and  tariffs,  then  giving  them  publicity,  and 
afterwards  maintaining  them  without  rebate  or  drawback,  and  without 


INTERSTATE    COMMERCE.  45 

• 

change,  until  after  reasonable  notice  to  the  public ;  the  violation  of 
such  requirements  to  subject  offending  officers  to  heavy  penalties  of  fine 
or  imprisonment  and  their  companies  to  the  payment  of  all  damages 
recovered  in  a  suit  at  law  by  parties  aggrieved. 

It  seems  to  be  now  pretty  generally  conceded  that  the  long  haul  is 
entitled  to  the  advantage  of  the  short  one  in  the  matter  of  rates,  other 
things  being  equal,  and  the  necessity  of  legislation  with  regard  to  that 
subject  is  not  apparent. 

CONCESSIONS  TO  LARGE   SHIPPERS. 

Why  a  different  rule  should  obtain  in  transportation  from  that  which 
prevails  in  other  departments  of  business,  giving  more  favorable  fig- 
ures to  the  larger  purchaser,  we  are  unable  to  understand.  But  for 
the  protection  of  shippers  the  unit  of  quantity  should  be  defined  so  as 
to  avoid  misunderstandings,  and  shipments  to  be  made  under  the  oper- 
ation of  the  rule  should  be  limited  to  equal  periods  of  time — a  day  or 
week  or  mouth,  as  may  be  agreed.  In  our  judgment  a  train-load  of,  say, 
twenty  cars  is  entitled  to  a  better  rate  than  a  single  car-load  of  any 
commodity,  and  a  contract  for  an  exceptionally  large  shipment  at  one 
place,  within  a  specified  time,  would  be  entitled  to  a  special  rate,  with- 
out doing  injustice  to  smaller  shippers.  Of  course  it  will  be  claimed, 
and  not  without  reason,  that  such  concession  would  have  a  tendency 
to  drive  the  smaller  operators  from  the  market.  That  is  true,  but  the 
latter  could  unite  their  shipments  for  a  similar  quantity  at  the  same 
rate,  or  purchase  jobbing  lots  from  heavy  shippers,  realizing  in  the 
price  paid  a  part  of  the  reduction  enjoyed*  by  such  shippers  from  the 
tariff  rates.  For  the  protection  of  the  public  concessions  made  under 
the  operation  of  the  rule  last  suggested  should  be  bulletined  for  the  in- 
formation of  other  shippers. 

UNIFORM  ACCOUNTS. 

Uniform  accounts,  so  far  as  earnings  and  expenses  are  concerned,  are 
not  only  practicable,  but  should  be  insisted  upon,  for  the  purposes  of 
comparison  and  information  in  the  adjustment  of  tariff  rates  and  the 
division  of  earnings  between  companies  forming  through  lines.  The 
Saratoga  distribution  of  expenses,  so  called,  is  now  in  use  by  all  the 
companies  reporting  to  this  and  several  other  commissions,  requiring 
conformity  therewith,  and  the  advantage  of  the  uniformity  and  sim- 
plicity thereby  secured  is  indispensable  to  a  proper  comparison  of  the 
results  of  operation. 

As  the  companies  in  the  States  where  railroad  commissioners  have 
been  created  are  required  by  law  to  make  annual  reports  of  their  con- 
dition and  business  to  such  commissions,  which  reports  will  always  be 
within  the  reach  of  Congress  and  its  committees,  the  necessity  for  fur- 
ther reports  to  other  authorities  is  not  obvious. 

So  fur  as  water-routes  are  concerned,  their  maintenance  and  develop- 
ment, as  it  appears  to  us,  should,  rest  entirely  upon  their  own  merits 
as  part  of  our  transportation  system  and  the  advantages  they  offer 
for  facilitating  the  movement  of  freight.  If  incidentally  the  effect  of 
their  construction  or  improvement  would  be  to  cheapen  traffic  rates 
ly  rail,  such  circumstance  would  be  a  factor  in  their  favor.  But  for 
the  Government  to  undertake  works  of  doubtful  utility  for  the  purpose 
of  regulating  railroad  rates  would  probably  prove  an  unprofitable  ex- 
periment. 


46  INTERSTATE    COMMERCE. 

A  COMMISSION  NECESSARY. 

Should  legislation  be  perfected  by  Congress  for  the  purpose  of  regu- 
lating interstate  commerce,  its  provisions  will  unquestionably  have  to 
be  carried  into  effect  by  a  commission  to  be  organized  for  the  purpose. 
The  creation  of  such  commission  and  defining  its  powers  would  not  be 
the  least  difficult  problem  to  the  solving  of  which  the  offices  of  Con- 
gress would  have  to  be  addressed.  Such  a  commission  would  neces- 
sarily be  clothed  with  quasi  judicial  powers;  and  therefore  to  familiar- 
ity with  details  of  railroad  operation  and  the  conditions  surrounding 
the  railroad  properties  in  the  different  States -should  be  added  such 
knowledge  of  the  rules  of  law  governing  the  determination  of  the  vexed 
questions  that  will  be  continually  presented  to  the  attention  of  the 
commission  as  will  entitle  its  conclusions  to  the  respect  of,  and  ready 
compliance  with,  by  the  parties  affected  thereby.  It  has  been  sug- 
gested in  another  quarter  that  such  commission,  if  selected  from  among 
the  members  comprising  the  commissions  of  the  several  States  by  rea- 
son of  their  thorough  familiarity  with  the  situation  in  their  respective 
localities  and  the  relation  which  their  State  system  of  railroads  sus- 
tain to  lines  engaged  in  interstate  traffic,  would  be  in  the  surest  posi- 
tion to  carry  out  the  intent  of  the  laws  successfully.  That  such  sugges- 
tion is  entitled  to  consideration  as  being  of  force  we  think  is  evident. 
But  it  is  more  than  possible  that  Congress  can  agree  upon  some  plan 
for  a  more  effective  tribune  for  the  disposal  of  the  important  question 
to  be  referred  to  it  for  its  decisions. 

We  regret  that  we  have  been  unable  to  respond  more  promptly  to 
the  call  of  your  committee  for  our  views  upon  the  several  topics  em- 
braced in  the  questions  suggested  by  your  circular  and  your  letter  of 
more  recent  date.  But  if  such  as  we  are  able  to  send  you  at  this  late 
moment  shall  be  of  any  service  in  helping  you  to  reach  conclusions 
upon  the  subject  of  the  important  inquiry  with  which  your  committee 
is  charged,  we  shall  be  glad  that  in  some  measure  we  have  contributed 
to  a  result  so  full  of  moment  to  the  people  of  our  country. 


HOEATIO  SEYMOUR'S  STATEMENT. 

The  following  letter  was  received  from  the  Hon.  Horatio  Seymour,  of 
New  York : 

UTICA,  May  4,  1885. 

DEAR  SIR  :  I  have  been  confined  to  my  house  daring  the  past  winter  and  I  am  still 
too  weak  to  prepare  a  paper  with  regard  to  our  water-routes.  I  do  not  think  they 
are  properly  valued.  Their  usefulness  does  not  depend  so  much  upon  the  amount  of 
tonnage  carried  upon  them  as  it  does  upon  their  influence  upon  the  cost  of  transpor- 
tation. As  they  are  open  to  all,  the  moment  undue  charges  are  made  upon  other 
modes  of  transportation  boats  which  are  cheaply  built  are  placed  upon  them.  Pool- 
ing arrangements  cannot  be  made  with  boatmen,  as  they  would  only  serve  to  multiply 
boats  and  boatmen.  I  value  as  highly  as  any  one  can  our  railroads.  But  they  are 
forced  into  pooling  arrangements,  which  ara  hurtful  to  the  interests  of  commerce.  We 
have  strong  proof  of  this  in  the  history  of  the  canals  of  New  York.  Up  to  a  late  date 
the  State  imposed  heavy  tolls  upon  them  and  the  railroads  kept  up  high  charges.  The 
balance  of  trade,  was  against  our  country.  We  could  not  send  our  products  as  freely 
as  we  should  to  Europe.  Our  State  then  began  to  reduce  the  tolls,  and  iu  1880  the 
canal  was  made  free  of  charges.  The  result  was  that  the  balance  of  trade  was  in 
favor  of  our  country  iu  its  dealings  with  Europe  and  we  enjoyed  unusual  prosperity. 
The  tonnage  of  the  canal  has  not  been  much  increased  by  the  policy  of  low  tolls  or 
no  tolls,  but  the  cost  of  carrying  grain  from  Chicago  to  Now  York  is  cut  down  to 
about  one-third  of  the  former  charges. 


INTERSTATE    COMMERCE.  47 

I  send  you  a  paper  I  prepared  on  this  subject-  I  wish  to  call  your  attention  to  a 
table  which  it  gives,  taken  from  the  official  reports  of  the  General  Government.  I 
can  make  no  argument  in  favor  of  water-routes  so  clear  and  strong  as  this  official 
table. 

It  is  strange  that  many  regard  with  complacency  plans  for  ship  canals  which  will 
enable  vessels  to  sail  around  our  country  from  New  York  to  California  only  touching 
at  a  few  points,  while  they  denounce  improvements  across  our  country  giving  pros- 
perity to  all  points  on  their  lines  in  our  own  country,  while  the  ship  canals  across 
the  isthmus  are  for  the  benefit  of  other  lands  as  well  as  our  own. 

Canals  as  regulators  of  transportation  will  soon  be  appreciated.  Water-routes  are 
the  only  reliable  protections  against  undue  charges  for  carrying.  The  people  will 
soon  learn  that  fact. 

I  fear  you  will  find  it  hard  to  read  this  letter.    I  am  so  weak  I  write  with  difficulty. 
Respectfully,  yours, 

HORATIO  SEYMOUR. 

Hon.  8.  M.  CULLOM. 


THE  ADJUSTMENT  OF  RAILROAD  BATES. 

Paper  submitted  by  George  C.  Pratt,  chairman  of  the  Missouri  railroad 
commission,  and  approved  by  his  colleague,?  on  the  commission. 

The  railroad  provides  a  mode  of  overland  transportation  by  means  of 
which  the  business  is  conducted  with  less  frictional  resistance,  and  con- 
sequently with  less  expense  for  motive  power,  than  in  the  ordinary  way ; 
or,  in  other  words,  it  furnishes  cheap  transportation.  The  following 
quotation  elucidates  this  point : 

As  to  the  question  of  economy  in  railroad  transportation,  it  has  been  demonstrated 
that  freight  can  be  carried  by  rail  for  one-twentieth  part  or  5  per  cent,  of  what  it 
costs  by  dirt  road,  which  is  a  saving  of  95  per  cent,  on  the  cost  of  transportation ;  and 
that  at  4  cents  a  mile  passenger  rate  it  is  cheaper  for  a  man  who  can  earn  a  dollar  a 
day  at  home  to  do  his  traveling  by  railroad  than  on  foot.  To  have  secured  for  our- 
selves and  for  our  fellow-citizens  the  benefits  of  this  mode  of  conveyance  means, 
therefore,  that  we  have  secured  that  cheap  transportation  which  railroads  alone  can 
furnish  ;  and  if  we  examine  critically  all  the  particulars  wherein  is  manifested  its 
superiority  over  other  modes  of  transportation  overland,  we  shall  find  them  all  to  have 
an  economic  value.  Cheap  transportation  is,  therefore,  the  summum  bonum  in  railroad 
construction,  the  one  supreme  benefit  resulting  therefrom  which  alone  justifies  the 
liberality  of  our  laws  respecting  it,  and  furnishes  the  excuse  for  exercising  the  right 
of  eminent  domain  in  its  favor.  The  limit  to  this  economic  result  to  the  public  on 
the  one  side  is  the  boundary  of  reasonable  profits  on  the  other  side,  and  this  line  of 
demarkation  between  the  two  interests  is  the  neutral  ground  on  which  alone  a  fair 
schedule  of  rates  can  be  adiusted. 

It  is  not  surprising,  therefore,  that  popular  opinion  seizes  upon  the 
matter  of  rates  as  the  one  great  and  important  subject  connected  with 
railroads  demanding  attention,  supervision,  and  control.  This  senti- 
ment found  expression  in  the  old  railroad  charters  in  the  limitation  of 
rates.  All  maximum  rates  established  forty  years  ago  were  high,  it  is 
true,  as  compared  with  present  rates ;  but  no  one  then  knew  the  actual 
cost  of  transportation  by  rail,  much  less  what  would  be  its  cost  in  1885. 
During  the  first  fifty  years  of  the  life  of  the  railroad  the  ingenuity  'of 
its  friends  and  devotees  was  expended  mainly  on  increasing  the  sta- 
bility and  endurance  of  the  track,  the  speed  and  power  of  the  locomo- 
tive, the  capacity  and  convenience  of  the  various  kinds  of  cars,  and  on 
the  general  improvement  of  all  kinds  of  machinery  and  appurtenances 
used,  with  only  incidental  attention  to  economy  in  operation.  The 
financial  crisis  which  culminated  in  1873,  and  which  knocked  off  25  and 
50,  and  in  some  extreme  cases  75  per  cent,  from  the  market  value  of 
our  most  important  exports,  caused  the  wail  of  distress  which  arose 
from  among  the  producers  to  be  mingled  with  loud  demands  for  a  re- 


48  INTERSTATE    COMMERCE. 

duction  in  railroad  rates.  There  being  also  a  perceptible  diminution  in 
the  ratio  of  the  hitherto  rapid  increase  in  volume  of  business,  the  result 
was  a  more  careful  attention  to  economy  in  transportation.  In  1875 
the  minimum  rate  at  which  freight  could  be  carried  at  a  profit  by  rail 
was  supposed  to  bel  cent  per  ton  per  mile;  now  (in  1885)  it  is  put  at 
one-half  a  cent.  There  are  no  two  companies,  however,  that  can  carry 
freight  at  exactly  the  same  figures,  and  scarcely  any  two  experts  that 
will  arrive  at  the  same  conclusions  as  to  an  average  rate  after  a  survey 
of  the  whole  field.  Consequently  there  is  very  little  uniformity  of  opin- 
ion as  to  what  is  a  fair  rate  in  a  given  case,  and  still  less  as  to  any  gen- 
eral rate  for  determining  what  is  a  reasonable  rate  in  all  cases,  or  what 
are  the  constituent  elements  of  an  equitable  rate  in  any  case.  Kailroad 
officials  persistently  deny  the  possibility  of  making  any  rules  that  will 
be  generally  applicable,  as  well  as  the  propriety  of  any  attempt  at  the 
regulation  of  this  matter  on  the  part  of  Government.  Having  demon- 
strated to  the  world,  however,  that  after  sixty  years'  experience  they 
themselves  cannot  make  and  maintain  an  equitable  system  of  rates, 
and  having  proclaimed  the  necessity  for  the  same  by  calling  upon  Gov- 
ernment to  legalize  and  enforce  agreements  among  themselves  for  that 
purpose,  they  are  estopped  from  making  any  objection  if  Government 
now  undertakes  to  make  and  enforce  equitable  rules  and  regulations  on 
this  subject. 

Custom  has  decreed  that  all  adult  passengers  shall  be  charged  alike 
for  same  quality  of  accommodations,  ?.  e.  at  so  much  a  passenger,  and 
that  they  shall  be  charged  according  to  distance  carried,  i.  e.  at  so  much 
a  mile.  It  has  also  decreed  that  freight  shall  be  charged  according  to 
weight,  i.  e.  at  so  much  per  100  pounds,  or  per  ton,  or  per  car  load,  or 
its  equivalent  in  space;  but  in  regard  to  distance  there  are  in  this 
case  no  such  clearly  defined  rules  as  in  the  other  case.  Perhaps  the 
only  well-settled  point  respecting  distance  is  that  rates  should  be  more 
per  mile  on  short  hauls  than  on  long  ones.  This  would  seem  to  de- 
stroy the  analogy  between  passenger  and  freight  traffic  and  to  demand 
that  their  rates  be  adjusted  on  entirely  different  principles.  No  defi- 
nite ratio  for  the  differences  between  long  and  short  hauls  is  given,  how- 
ever, and  the  whole  matter  of  freight  rates  is  left  in  confusion.  But  if 
we  inquire  into  the  reason  for  this  last-mentioned  rule,  we  will  find  that 
it  results  from  an  effort  to  provide  a  compensation  for  the  actual  dif- 
ference between  passengers  and  freight.  The  passenger  loads  and  un- 
loads himself  and  is  charged  only  for  the  haul,  while  freight  must  be 
handled  by  the  carrier ;  and  the  cost  of  handling  is  a  fixed  or  constant 
one  regardless  of  distance  hauled.  If,  therefore,  we  make  a  separate 
and  constant  charge  for  handling  freight,  which  may  be  called  a  termi- 
nal charge,  then  the  charge  for  hauling  or  the  transportation  charge 
may  be  a  regular  one  per  ton  or  per  hundred  pounds  per  mile,  and  the 
analogy  between  passenger  and  freight  traffic  is  preserved. 

The  rule  established  by  custom  for  passenger  charges  is  a  just  one. 
The  cost  of  carrying  any  burden  varies  as  the  distance  carried.  Freight 
charges  should  therefore  be  composed  of  two  elements,  the  terminal 
charge  and  the  transportation  charge,  the  former  being* the  same  for  all 
distances,  and  the  latter  a  regular  rate  per  hundred  pounds  per  ton  or 
per  car  for  the  distance  hauled.  With  a  terminal  charge  of  $1  per  ton 
and  a  transportation  charge,  or  hauling  rate,  of  1  cent  per  ton  per 
mile,  the  total  charge  for  a  10-mile  haul  would  be  $1.10 ;  for  a  20-mile 
haul,  $1.20 ;  for  a  50-mile  haul,  $1.50 ;  for  a  100-mile  haul,  $2.00,  and  for 
a  1,000-mile  haul,  $11  a  ton.  As  distance  and  the  total  charge  increases 
the  ratio  of  the  terminal  to  the  total  charge  decreases,  and  in  long  hauls 


INTERSTATE    COMMERCE.  49 

becomes  almost  imperceptible.  If  rates  adjusted  on  this  basis  were  en- 
forced on  all  traffic,  State  and  interstate,  the  question  of  long  and 
short  hauls  would  be  solved,  discriminations  in  favor  of  competing 
points  and  railroad  wars  would  cease.  That  an  exceptional  case  de- 
manding a  deviation  from  this  rule  would  never  occur,  we  do  not  affirm ; 
but  every  such  case  would  be  an  exception  to  the  rule  of  equitable  ad- 
justment, and  not  the  rule  itself. 

Another  important  factor  in  the  adjustment  of  carrier's  rates  is  the 
insurance,  the  carrier  being  an  underwriter;  and  this  introduces  the 
subject  of  classification  of  freights,  a  matter  of  no  pecuniary  value  to 
any  one,  but  a  great  convenience  to  tfce  rate^maker.  The  amount  in- 
sured on  any  article  of  freight  is  the  value  of  that  article,  and  the 
charges  on  different  articles  on  account  of  insurance  should  vary  as 
their  value  per  weight ;  and  in  the  case  of  articles  of  same  value  per 
weight,  between  which  there  is  a  manifest  difference  as  to  risk  of  break- 
age, &c.,  there  is  also  another  variation  corresponding  to  difference  in 
rate  of  insurance,  or  difference  in  premiums  paid  on  policies  of  equal 
amount.  This  last  variation,  however,  although  assumed  by  many  to  be 
the  only  one  due  to  insurance,  is  in  reality  so  small  as  to  be  impercep- 
tible in  the  total  charge,  except  in  a  very  few  cases.  Pig-iron  is  very 
rarely  lost  or  even  injured  in  a  railroad  accident;  but  such  articles  are 
few.  The  importance  of  taking  into  account  the  value  of  the  article 
carried  is  made  very  clear  by  comparing  a  car-load  of  bituminous  coal, 
worth  $30,  with  a  car:load  of  dry  goods,  worth  $30,000.  No  one  can 
afford  to  take  these  two  risks  for  the  same  money,  and  at  the  same  time 
to  do  so  would  conduce  to  a  public  injury.  At  1  cent  per  ton  per  mile 
for  hauling,  that  coal  cannot  be  mined,  loaded,  hauled,  and  delivered  at 
a  point  over  100  miles  distant  from  the  mine  without  consuming  the 
value  of  the  article  and  leaving  nothing  for  the  producer ;  while,  on 
the  other  hand,  the  dry  goods  could  be  carried  at  the  same  rate  1,000 
miles  and  the  cost  of  transportation  not  be  taken  into  account  in  the 
selling  price  of  the  articles.  In  fact,  many  kinds  of  goods  of  that  class 
could  be  charged  10  cents  per  ton  per  mile  for  that  distance  before  this 
charge  would  be  perceptible  in  the  retail  price.  It  is  clear,  therefore, 
that  justice  to  producers,  carriers,  and  consumers  demands  that 
freight  rates  should  vary  directly  as  the  values  of  the  articles  carried 
vary  per  ton  or  per  hundred  pounds,  as  the  case  may  be.  There  being 
no  other  factor  in  the  problem  of  classification  of  freights  so  important, 
so  regular  in  its  variations,  and  so  convenient  as  this,  it  may  safely  be 
assumed  as  the  most  suitable  basis  for  such  classification,  allowing  at 
the  same  time  the  rate-maker  to  exercise  a  proper  discretion  in  the  con- 
sideration of  rate  of  insurance,  risk  of  breakage,  injury  to  other  articles, 
bulk,  &c.  Bulk  becomes  especially  important  when  so  great  as  to  pre- 
vent the  loading  of  a  car  to  its  full  weight-bearing  capacity.  From  ten 
to  fifteen  classes  will  probably  be  found  sufficient  for  all  traffic  in  this 
country,  and  they  may  be  so  arranged  that  the  lowest  class  shall  em- 
brace articles  worth  less  than  $5  a  ton  and  the  highest  class  those 
worth  over  85,000  a  ton,  or  some  less  amount.  Specials  will  sometimes 
be  necessary, 'and  subclasses  will  be  found  convenient.  The  latter  should 
be  multiples  of,  such  as  one-half,  one  and  a  half,  or  two  times  a  given 
class,  but  in  their  use  the  hauling  rate  only,  and  not  the  terminal  charge 
should  be  modified.  To  raise  or  to  lower  the  terminal  charge  is  to  raise 
or  to  lower  the  total  charges  on  short  hauls  as  compared  with  long  ones. 
Fifty  cents  a  ton  is  suggested  as  a  suitable  terminal  charge  for  all 
classes  based  on  a  valuation  of  less  than  $50  a  ton,  and  $1  a  ton  for  all 
higher  classes.  The  hauling  rate  may  increase  regularly  from  4  mills 
16232  AP 4 


50  INTERSTATE    COMMERCE. 

on  the  lowest  class  to  6  or  perhaps  10  cents  per  ton  per  mile  on  the 
highest  class,  the  hundred-pound  unit  being  uniformly  one-twentieth  of 
the  ton. 

Many  people  suppose  that  all  freight  should  be  carried  at  the  same 
rate.  This  might  be  true  but  for  the  matter  of  insurance;  and  if  we 
were  to  relieve  the  carrier  of  his  responsibility  as  underwriter  other 
parties  would  assume  it,  resulting  finally  in  a  more  expensive  system, 
and  in -many  and  various  injurious  effects  on  all  parties  interested.  It 
is  better  to  hold  the  carrier  strictly  accountable  as  insurer.  He  can 
carry  the  risk  cheaper  than  any  one  else  can  possibly  carry  it,  and  it 
furnishes  a  stimulus  to  his  diligence,  his  watchfulness,  and  his  integrity. 
A  recognition  of  this  duplex  function  of  the  carrier  is  absolutely  es- 
sential to  a  correct  adjustment  of  that  equitable  system  of  rates  whereby 
his  total  receipts  from  both  sources  will  secure  to  him  a  reasonable  profit 
on  his  business,  and  that  all  else  may  inure  to  the  benefit  of  the  public 
in  the  shape  of  cheap  transportation. 


W.  L.  BEAGG'S  STATEMENT. 

Statement  of   W.  L.  Bragg,  Montgomery,  Ala.,  late  president  of  the  Ala- 
bama railroad  commission. 

I  think  it  proper  to  state  that  I  have  never  been  engaged  in  the  busi- 
ness of  operating  railroads,  but  am  a  lawyer  by  profession  and  have 
practiced  my  profession  for  more  than  twenty  years.  Such  knowledge 
and  information  as  1  have  in  regard  to  the  practical  operation  of  rail- 
roads and  railroad  legislation,  and  my  views  upon  these  subjects,  have 
been  formed  by  virtue  of  the  fact  that  from  March  1,  1881,  to  March  1, 
18S5,  I  was  president  of  the  railroad  commission  of  Alabama,  and 
during  that  time  devoted  myself  closely  to  the  subject  of  supervising 
the  rates  and  operation  of  railroads  in  the  State  of  Alabama  under  the 
laws  of  this  State.  And  as  the  commissioners  were  required  by  the 
statute  to  make  recommendations  in  their  annual  reports  to  the  gen- 
eral assembly  for  additional  legislation,  I  also  devoted  considerable 
time,  to  that  subject,  examiuning  as  carefully  as  1  could  the  railroad 
commission  laws  of  England  and  the  different  States  of  the  American 
Union,  and  the  statutory  enactments  generally  bearing  upon  the  subject. 

A  NATIONAL   COMMISSION. 

(1)  The  best  method  of  preventing  the  practice  of  extortion  and  un- 
just discrimination  by  corporations  engaged  in  interstate  commerce,  in 
my  opinion,  is  to  establish  a  national  railroad  commission,  composed  of 
several  commissioners  with  a  president,  and  giving  the  board  large  dis- 
creti«  nary  powers  on  the  subject  of  revising  the  rates  of  the  railroad 
companies,  and  with  authority  to  correct  extortion  and  unjust  discrimi- 
nation, and  to  reduce  the  rates  of  railroad  companies  to  a  fair  and  just 
compensation  ;  all  freight  and  passenger  tariffs  of  railroad  companies 
engaged  in  interstate  commerce  to  be  submitted  to  the  commission  for 
revision  ;  the  commission  to  have  power  to  revise  them  from  time  to 
time  as  often  as  occasion  may  be  necessary,  either  by  increasing  or  re- 
ducing any  of  the  rates  charged,  and  by  graduating  them  as  experience 
may  show  to  be  necessary;  extortion  to  be  criminal  and  punished  by 


INTERSTATE    COMMERCE.  51 

penalty  in  the  courts ;  unjust  discrimination  to  be  criminal  also,  and 
punished  in  the  courts  of  the  United  States ;  the  rates  made  by  the 
National  liailroad  Commission  to  be  conclusive  evidence  in  all  courts 
and  before  every  officer  or  tribunal  that  the  same  are  just  and  reasona- 
ble ;  upon  approving  any  tariff  the  commissioners  to  give  a  certificate 
of  approval  to  be  attached  to  the  tariff,  and  to  furnish  each  company 
with  one  copy  of  the  tariff,  and  to  retain  one  copy  as  a  record  of  their 
office  and  for  public  inspection.  A  great  many  other  details  I  could 
name,  but  it  would  take  up  unnecessary  space;  for  they  are  such  as 
would,  most  naturally  occur  to  the  committee  in  connection  with  the 
views  I  have  here  expressed. 

(2)  Bates  charged  by  corporations  for  through  traffic  are  generally 
reasonable  enough,  though  there  are  many  glaring  inequalities  between 
them.     For  instance,  much  higher  freight  is  charged  by  railroads  from 
New  York  to  Montgomery,  Ala.,  than  from  New  York  to  Mobile,  al- 
though the'ireight  passes  by  Montgomery  on  its  way  from  New  York  to 
Mobile.    The  reason  alleged  for  this  is  competition,  but  we  all  know 
that  there  is  no  competition  whatever  at  Mobile  by  water  lines  that  has 
anything  to  do  with  making  these  prices.    As  to  the  local  rates  of  rail- 
roads, they  are  whatever  the  traffic  will  bear,  and  are  usually  in  the 
highest  degree  extortionate. 

(3)  My  opinion  is  that  publicity  of  rates  should  be  required  by  law, 
and  that  changes  of  rates  without  public  notice  should  be  prohibited. 
The  best  method  of  securing  uniformity  and  stability  of  rates,  in  my 
opinion,  would  be  through  the  action  of  a  national  railroad  commission, 
so  far  as  interstate  commerce  is  concerned. 

MAXIMUM  AND  MINIMUM  EATES. 

(4)  As  to  the  advisability  of  establishing  a  system  of  maximum  and 
minimum  rates,  my  opinion  is  that  all  these  rates  should  be  maximum 
rates,  the  commission  making  them  being  sure  that  such  maximum  rates 
allow  a  fair  and  reasonable  compensation  for  the  services  rendered, 
taking  into  consideration  all  the  elements  that  enter  into  it,  and  erring, 
as  every  such  body  naturally  would  do,  if  at  all,  in  favor  of  the  con- 
servative rights  of  property.    I  can  readily  see  how  a  system  of  maxi- 
mum and  minimum  rates  would  involve  a  great  deal  of  confusion  and 
complications,  and  be  impossible  by  practical  enforcement  as  a  method 
of  governmental  supervision. 

(5)  As  elements  to  be  considered  in  revising  the  rates  of  railroad 
companies,  the  cost  of  transportation,  the  conditions  of  business,  and 
occasional  competition,  wherever  it  exists,  are  each  factors  that  should 
be  considered.    Each  of  these  is  very  important.    Among  railroads 
there  is  really  but  little  competition,  but  the  elements  of  cost  and  the 
conditions  of  business  are  in  the  highest  degree  important,  and  for  that 
reason  rates  should  be  maximum  rates,  so  as  to  be  flexible,  and  the 
commission  should  be  required  to  remain  in  almost  perpetual  session. 

REBATES  AND  POOLS. 

(6)  My  experience  is  against  the  wisdom  of  any  system  of  rebates 
and  drawbacks.     I  believe  that  rebates  and  drawbacks  ought  to  be 
made  penal  by  statute.    I  believe  they  should  be  entirely  prohibited. 
My  experience  has  shown  that  they  are  a  potent  means  by  which  unjust 
discrimination  is  most  usually  perpetrated,  and  that  they  are  the  most 
thorough  of  all  cloaks  for  fraud. 


52  INTERSTATE    COMMERCE. 

(7)  Although  pooling  contracts  and  agreements  are  freq  uently  sus- 
ceptible of  great  abuses,  yet  I  am  not  prepared  to  say  that  they  ought 
to  be  prohibited  by  law.     I  am  certain,  however,  that  they  ought  to  be 
regulated  by  law,  and  that  the  terms  of  such  agreements   should  be 
made  public  and  subject  to  official  approval. 

(8)  1  believe  that  a  provision  should  be  made  by  law  for  securing  to 
shippers  the  right  to  select  the  lines  or  parts  of  lines  over  which  their 
shipments  shall  be  transported. 

(9)  I  have  already  answered  the  ninth  interrogatory  substantially  in 
my  answer  to  the  first  interrogatory. 

(10)  My  opinion  is  that  corporations  engaged  in  interstate  commerce 
ought  to  be  permitted  to  charge  a  lower  proportionate  rate  for  a  long 
than  for  a  short  haul.     And  upon  this  particular  point  I  do  not  know 
that  any  legislation  is  needed. 

(11)  My  opinion  is  that  no  concession  in  rates  should  be  allowed  to 
large  shippers,  except  such  as  represent  the  actual  difference  in  the  ex- 
penses of  handling  large  shipments  over  small  shipments,  and  that  such 
concessions  should  be  made  known  to  the  public  by  advertised  rates. 

UNIFORM  ACCOUNTS  AND  REPORTS. 

(12)  It  would  be  next  to  impossible  for  a  national  railroad  commis- 
sion to  justly,  safely,  and  intelligently  revise  the  rates  of  railroads  en- 
gaged in  interstate  commerce,  unless  a  uniform  system  of  accounts  was 
required  to  be  kept  by  these  companies.     Unless  such  uniform  system 
of  accounts  was  kept,  it  would  be  impossible  for  the  commissioners  or 
their  clerk  to  know  what  the  actual  net  earnings  of  the  company  were. 
Unless  a  uniform  system  of  accounts  was  required  to  be  kept  the  com- 
panies would  be  stuffing  their  earnings  or  their  losses,  as  the  case  might 
be,  under  heads  that  would  baffle  all  efforts  to  arrive  at  their  actual 
condition  within  a  reasonable  space  of  time. 

(13)  If  a  national  railroad   commission  were  to  be  established,  it 
would  be  absolutely  necessary  that  railroad  corporations  engaged  in 
interstate  commerce  should  be  required  to  make  annual  reports  to  the 
commission  in  order  to  enable  the  commission  to  see  the  actual  condi- 
tion and  what  rates  would  be  fair  and  reasonable  for  them  as  returns 
upon  their  property  invested.     Such  reports  should  embrace  a  full  and 
detailed  statement  of  their  earnings  and  expenses  from  freight  service, 
passenger  service,  express  service,  mail  service,  and  from  all  sources. 

(14)  In  making  provisions  to  secure  cheap  transportation  it  is  of  the 
utmost  importance  in  arriving  at  this  great  end  that  the  Government 
should  develop  as  much  as  can  be  done  consistently  with  true  economy 
the  water  routes  of  the  United  States.    Especially  in  heavy  freights  do 
these  water  routes  compete  with  railroads  to  a  considerable  extent  and 
thereby  reduce  the  rates  of  transportation. 

(15)  I  have  already  answered  this  in  my  answer  to  the  first  interro- 
gatory. 

RESULTS  OF  RAILROAD  LEGISLATION. 

I  will  state  that  so  far  as  my  reading  and  observation  have  extended 
the  experience  of  great  nations  and  states  has  been  substantially  alike 
on  this  subject.  They  first  commence  by  attempting  legislation  filled 
with  penalties  as  a  means  of  regulating  the  business  of  railroads  and 
preventing  extortion  and  unjust  discrimination.  All  such  legislation 
by  itself  dependent  alone  upon  the  courts  has  signally  failed.  Then  the 
next  step  has  been  with  them  the  creation,  of  a  railroad  commission  for 


INTERSTATE    COMMERCE.  53 

the  purpose  of  administering  the  statutes,  backed  up  by  the  courts  of 
the  country,  and  this  last  method  of  railroad  supervision  has  in  Eng- 
land'and  among  all  of  the  States  of  the  American  Union  been  a  suc- 
cess, and  has  conferred  great  and  lasting  benefits  upon  the  people  with- 
out doing  injustice  or  injury  to  the  railroad  companies. 

I  wilt  state  that  up  to  the  time  I  was  railroad  commissioner  myself 
I  knew  but  little  about  legislation  of  this  character,  and  entertained  a 
very  great  prejudice  against  it.  But  my  experience  has  shown  me  that 
such  legislation  is  absolutely  necessary  to  prevent  unjust  discrimination 
and  extortion,  and  to  protect  shippers  against  these  great  evils.  I  am 
convinced  that  such  a  commission  is  as  necessary  tor  interstate  com- 
merce as  it  is  in  the  different  States  for  local  or  State  commerce,  and 
even  more  so.  Inequalities  of  pooled  rates  are  very  glaring  in  many 
instances,  and  grossly  unjust. 

I  have  answered  as  briefly  as  I  can  the  questions  propounded  by  your 
honorable  committee.  The  subject  involved  is  a  vast  one,  and  if  I  had 
the  time  1  could  now,  as  I  have  done  in  the  last  few  years,  write  several 
volumes  upon  the  subject,  but  I  forbear  perpetrating  such  an  infliction, 
and  it  would  be  far  beyond  the  time  I  could  possibly  take  for  it. 


THE  EAILEOAD  COMMISSIONERS  OF  MAINE. 

Statement  by  Messrs.  A.  W.  Wildes,  John  F.  Anderson,  and  D.  N,  Mort- 
land,  the  railroad  commissioners  of  the  State  of  Maine. 

While  the  Maine  railroad  commissioners  keenly  appreciate  the  grave 
import  of  the  queries  proposed  in  your  circular,  our  inability  to  offer  a 
satisfactory  solution  of  them  is  quite  apparent  to  ourselves.  We  doubt 
whether  it  is  practicable  to  reach  a  true  middle  ground  of  common  and 
general  benefit  in  any  attempt,  by  legislation,  to  correct  the  alleged  ex- 
tortions and  the  admitted  discriminations  by  which  the  managers  of  the 
immense  property  in  railroads  are  struggling  to  procure  some  return 
upon  the  capital  invested  therein.  If  the  time  has  arrived  when  action 
must  be  taken  by  the  General  Government,  we  think  that  a  national  com- 
mission might  possibly  be  so  constituted  as  to  fairly  represent  the  true 
business  interests  of  all  sections  and  all  properties,  and  be  clothed  with 
authority  for  advisory  adjudication  upon  vexed  questions  of  interstate 
commerce  that  may  be  referred  to  it  by  local  State  boards  or  by  United 
States  citizens  associated  for  the  purpose,  which,  thowiug  the  light  of 
open,  impartial,  and  reasonable  consideration  thereon,  might  conserve 
a  genuine  healthy  public  sentiment  in  favor  of  its  decisions. 

The  Maine  railroad  commissioners  also  proffer  the  individual  views  of 
the  general  ticket  agent  and  clerk  of  the  Portland  and  Ogdensburg  Rail- 
road Company,  Charles  H.  Foye,  of  Portland,  whose  thoughtful  paper 
we  believe  merits  your  consideration. 

CHARLES  H.  FOYE'S  STATEMENT. 

(1)  Whether,  if  ever  true,  the  charge  of  extortion  has  not  now  become 
obsolete,  through  the  eager  competition  of  rival  lines,  many  of  which 
were  created  as  a  remedy  and  defense  against  alleged  extortion ;  whether 
the  losses  of  individuals  under  any  such  extortion  have  not  been  amply 


54  INTEESTATE    COMMERCE. 

repaid  in  benefits  to  the  country  at  large  by  the  increase  of  rival  lines 
and  consequent  competition  ;  whether,  in  view  of  the  nature  of  the 
service  rendered  by  transportation  lines  being  created  by  law  for  cer- 
tain public  uses,  with  specific  duties  imposed  upon  them,  aud  restricted 
in  the  privilege  of  private  contract,  they  are  not  in  a  position  analogous 
to  that  of  public  servants  whose  discrimination, favoring  any  individual 
or  class,  is  an  injustice  to  the  interests  discriminated  against.  Extortion 
is  in  many  cases  counteracted  by  competition,  but  discrimination  cannot 
be  prevented  so  long  as  the  right  of  private  contract  is  conceded. 

(2)  The  reasonableness  of  any  charges  for  transportation  can  only 
be  determined  by  the  cost  of  service.    The  elements  of  cost  are  many 
and  vary  so  widely  that  it  would  be  unfair  and  unjust  to  fix  any  stand- 
ard by  which  to  measure  the  one  or  the  other  in  individual  cases. 

(3)  "The  question  of  publicity  of  rates  can  only  be  answered  after  the 
right  of  discrimination  is  admitted  or  denied.    If  denied,  then  the  pub- 
lic should  be  allowed  every  possible  safeguard  that  publicity,  uniformity, 
and  stability  of  rates  can  provide.    • 

(4)  Maximum  and  minimum  rates  established  by  law  are,  in  the 
present  undetermined  state  of  the  transportation  problem,  of  little  use 
in  solving  the  difficulty;  the  charge  of  extortion  and  injustice  may  be 
bandied  about  by  the  one  party  or  the  other  as  the  higher  rates  are 
charged  or  the  lower  insisted  upon. 

(5)  In  computing  cost  of  interstate  traffic  the  same  elements  that 
enter  into  local  traffic  must  be  fairly  considered. 

(6)  Any  system  of  rebates  or  drawbacks  is  but  another  method  of 
discrimination,  and  must  be  prohibited  if  uniformity  and  impartiality 
of  rates  are  to  be  established. 

(7)  Pooling  contracts  and  agreements  are  but  temporary  in  their  nat- 
ure, and  can  only  continue  during  the  pleasure  or  consent  of  the  con- 
tracting parties ;  disturbing  elements  are  inevitable  among  so  many, 
so  varied,  and  often  adverse  interests,  and  the  history  of  such  combi- 
nations in  this  country  furnishes  conclusive  evidence  that  they  cannot 
prevent  unfair  competition  aud  unjust  discrimination.* 

(8)  The  free  choice  of  route  is  as  essential  to  the  shipper  as  any  ques- 
tion of  rates,  and  any  restriction  of  such  choice  is  discrimination. 

(9)  It  would  appear,  from  long  experience,  that  no  method  can  secure 
uniformity  in  transportation  rates  where  the  adoption  and  use  of  such 
rates  is  dependent  upon  the  individual  choice  and  action  of  corpora- 
tions.   But,  if  it  be  not  against  public  policy,  a  method  might  be 
devised  whereby  interstate  commerce,  being  removed  from  the  control 
of  corporations,  should  be  governed  by  uniform  regulations  and  rates, 
made  and  established  by  an  impartial  representative  body,  empowered 
and  charged  with  such  duties  by  the  General  Government,  or  by  the 
Government  directly  through  a  department  resembling,  perhaps,  the 
Post-Office  Department  in  its  organization  and  operation,  except  that 
it  should  be  forever  removed  from  the  sphere  of  partisan  politics.    Such 
body  or  department,  operating  as  a  "  clearing-house,"  should  be  able  to 
establish  rates  for  transportation  of  passengers  and  freight  between  the 
States  fair  to  all  private  interests,  and  to  adjust  the  division  of  such 
rates  satisfactorily  among  the  corporations  interested  upon  a  basis  of 
their  respective  share  or  service  rendered  and  the  cost  of  such  service. 

The  removal  of  interstate  commerce  from  the  jurisdiction  of  corpora- 
tions into  the  control  of  one  common  authority  should  eliminate  from 
this  problem  of  transportation  at  least  one  disturbing  element,  viz,  the 
serious  interference  of  long,  indirect  routes  with  business  that,  under 
fair  rates,  would  prefer  and  select  direct  short  routes ;  while  the  longer 


INTERSTATE    COMMERCE.  55 

routes  could  hardly  be  debarred  from  engaging  in  such  business,  it  is 
unjust  to  other  corporations  and  demoralizes  trade  to  permit  such  diver- 
sion of  business  from  its  legitimate  channel.  It  is  an  entire  subversion 
of  the  principles  of  trade  to  say  we  must  perform  more  labor  and  under 
take  greater  expense  to  accomplish  what  our  competitors  do;  therefore 
we  will  charge  less  lor  our  work  than  they.  Private  individuals  may 
be  allowed  to  act  upon  such  lalse  reasoning ;  their  downfall  is  inevitable 
and  the  error  corrects  itself  by  their  ruin.  But  railroads  cannot  be 
eliminated;  they  are  peimanent  investments,  highways  that  must  be 
maintained,  and  their  mismanagement  and  mischievous  rivalship  are 
far-reaching  in  their  opeiatious  and  results.  If  it  is  proper  tor -the 
General  Government  to  interfere  with  or  correct  corporate  rights,  the 
just  control  of  transportation  certainly  promises  good  to  all  commercial 
interests,  to  producer,  trader,  carrier,  and  consumer,  in  that  it  would 
make  certain  a  factor  in  commercial  transactions  which  is  now  too  much 
a  matter  of  conjecture.  Questions  of  interstate' transportation  being 
thus  disposed  of,  corporations,  relieved  of  their  most  perplexing  and 
harassing  questions  and  duties,  would  be  free  to  develop  local  interests, 
upon  which,  it  is  conceded,  their  highest  prosperity  depends. 


THE  OHIO  COMMISSIONER. 

Statement  ~by  Henry  Apthorp,  commissioner  of  railroads  and  telegraphs, 

State  of  Ohio. 

I  have  been  too  busy  to  give  this  matter  as  early  attention  as  you 
desired,  or  as  full  consideration  as  its  importance  demands.  The  rail- 
way carrying  trade  of  this  continent  has  so  suddenly  grown  to  gigantic 
proportions,  and  it  is  reciprocally  related  to  such  a  multitude  of  interests 
both  of  public  and  of  private  concern,  and  so  little  of  this  subject  is 
known  to  me,  that  I  hesitate  to  give  specific  answers  to  the  questions 
of  your  circular: 

While  the  power  of  Congress  to  regulate  commerce  among  the  States, 
no  doubt  includes  the  power  to  regulate  that  element  of  commerce 
known  as  interstate  railway  traffic,  the  limit  within  which  this  power 
to  regulate  may  be  legally  and  properly  exercised  has  not  yet,  it  seems 
to  me,  been  clearly  defined.  If,  however,  the  common  law  does  not 
afford  a  speedy  and  efficient  remedy,  or  if  State  legislatures  cannot 
furnish  adequate  relief  for  extortion  and  unjust  discrimination — this  I 
understand  is  the  core  of  the  complaint — then  Congress  should  provide 
such  remedies,  under  its  power  to  regulate  commerce,  as  will  secure 
justice. 

Your  committee  is  in  a  better  position  than  any  one  else  to  know  to 
what  extent  extortion  and  unjust  discrimination  prevail  and  the  degrees 
to  which  they  are  practiced  in  interstate  railway  traffic,  but  for  a  long 
time  no  complaints  of  extortion  have  been  made  by  shippers  in  this 
State  to  this  office. 

It  has  become  quite  general  and  popular  to  refer  to  railway  trans- 
portation rates  as  a  tax  upon  the  product  carried.  Using  this  siinle 
in  the  subject  before  us,  and  carrying  it  one  step  farther,  I  think  the 
facts  will  show  that  governmental  valuation  and  taxation  of  property 
allows  quite  as  wide  a  range  of  discrimination  as  railway  rates.  1  do 
not  mention  this  to  invite  an  apology  for  the  latter,  nor  to  suggest 


56  INTERSTATE    COMMERCE. 

blame  for  the  former,  but  as  an  illustration  of  the  difficulty  in  applying 
a  theory  of  equity  to  practice  in  multiplied  affairs  that  will  be  satisfac- 
tory to  every  person  concerned.' 

Notwithstanding  these  difficulties,  improvement  is  demanded — as  an 
advance  to  a  better  condition  of  things  is  always  desirable ;  but  even 
with  this  to  urge  it,  1  seriously  doubt  the  wisdom  of  resorting  to  an  in- 
flexible law  of  Congress  to  govern  the  many  special  transactions  (that 
are  themselves  subject  to  inflexible  conditions)  embraced  in  the  matter 
referred  to  in  the  fifteen  questions  of  your  circular.  I  fear  the  remedy 
would  be  worse  than  the  disease. 

For  the  present  let  the  action  of  Congress  go  no  farther  than  to  es- 
tablish a  national  railway  commission,  authorized  and  directed  to 
gather  statistics  touching  this  new  industry.  After  this  commission 
has  become  acquainted  with  the  facts,  let  them  advise  Congress  what 
to  do  and  what  not  to  do. 


THE  CONNECTICUT  RAILROAD  COMMISSION. 

Letter  from  George  M.  Woodruff,  of  Litchfield,  chairman  of  the  railroad 
commission  of  Connecticut. 

I  made  no  response  to  yotfr  previous  letter  and  circular,  thinking  that 
many  wiser  men  would  weigh  you  down  with  opinions,  and  this  is  still 
my  feeling.  Briefly,  however,  I  would  say  that  "  extortion  and  unjust 
discrimination  by  corporations  engaged  in  interstate  commerce"  cannot 
survive  publicity,  and  publicity  can  best  be  obtained-  by  having  a  tri- 
bunal which  will,  without  cost  to  complainants,  hear,  make  public,  and 
pass  judgment  upon  the  complainant. 

Rates  now  charged  are  generally  as  low  as  shippers  and  consumers 
can  reasonably  ask.  There  are,  of  course,  some  exceptions.  Publicity 
of  rates,  not  to  be  changed  except  by  authority  of  a  commission,  would 
in  a  degree  secure  stability,  and  stability  would  be  a  protection  to  in- 
vestors and  traders  alike.  I  do  not  favor  fixing  rates  by  statute. 

Rebates  and  drawbacks  are  usually  the  result  of  partiality  rather 
than  of  business 'principles,  but  if  subject  to  official  inspection  and  ap- 
proval would  be  without  serious  objection. 

Pooling,  regulated  by  law  through  a  commission  with  power  to  con- 
trol and  enforce,  would,  I  believe,  be  desirable. 

Shippers  should  have  the  right  to  select  the  lines  over  which  their 
shipments  shall  be  transported,  but  if  sent  by  a  route  other  than  the 
one  commonly  used  by  the  receiving  road  the  same  dispatch  should  not 
be  required. 

Public  interest  does  not  require  any  legislation  which  would  prevent, 
under  all  circumstances,  charging  less  for  a  long  haul  than  for  a  short 
haul. 

Large  shippers  are  entitled  to  concessions  in  rates  only  on  the  basis 
of  the  difference  in  expense^of  hauling  their  shipments. 

The  greater  my  experience  the  more  desirable  does  it  seem  to  secure 
"  a  uniform  system  of  accounts,"  and  also  the  more  difficult  to  obtain 
absolute  uniformity.  A  general  uniformity  is  all  that  can  be  expected. 

Annual  reports  are  desirable  and  should  at  least  give :  Gross  earn- 
ings from  operation  (in  detail) ;  operating  expenses  (in  detail) ;  receipts 
from  all  sources ;  expenditures  for  all  purposes ;  balance-sheet  of  thi 
corporation ;  statement  of  stock  and  debt. 


INTERSTATE    COMMERCE.  57 

I  do  not  think  it  necessary  for  Government  to  develop  and  maintain 
a  system  of  water  routes  in  order  to  secure  cheap  transportation. 

I  believe  that  legislation  for  the  regulation  of  interstate  commerce 
can  be  best  enforced  through  a  commission,  and  that  such  a  commis- 
sion would  need  but  very  little  arbitrary  power. 


CHARLES  RANDOLPH'S  STATEMENT. 

Statement  of  Charles  Randolph,  South  Evanston,  III.,  late  secretary  Chi- 
cago board  of  trade. 

I  assume  it  to  be  conceded  that  the  States  are  powerless  to  exercise 
an  efficient  control  over  the  rates'  and  policy  of  transportation  lines  ex- 
tending beyond  their  own  territory,  while  at  the  same  time,  practically, 
all  the  interstate  lines  of  traffic  are  organized  under  State  charters, 
and  are,  in  at  least  some  degree,  subject  to  State  authority.  I  also  as- 
sume that  as  State  organizations  they  are  not  subject  to  any  supervisory 
control  by  the  National  Government,  in  so  far  as  their  operations  are 
strictly  confined  within  the  State  granting  their  several  charters  ;  but 
that  Congress  has  undoubted  authority  over  traffic  between  the  States, 
or  that  passing  from  one  State  into  another,  by  whatever  means  it  may 
so  pass,  I  suppose  may  be  taken  as  practically  settled.  If,  however,  it 
is  sound  policy  to  require  that  transportation  lines  shall  not  be  per- 
mitted to  charge  more  per  ton  per  mile  for  a  short  than  for  a  longer 
haul,  and  that  equity  to  the  lines  and  to  the  people  will  be  reached  by 
establishing  and  maintaining  uniform  rates  on  that  basis,  then  it  would 
seem  that  the  whole  question  might  safely  and  properly  be  relegated  to 
State  control ;  inasmuch  as  under  that  view  of  equity  the  people  of 
other  States  would  have  no  right  to  expect  or  require  different  rates  on 
their  shipments  through,  or  partly  through,  a  given  State  than  are  ac- 
corded to  the  people  of  that  State.  I  do  not  consider  such  a  theory 
either  sound  as  public  policy  or  just  to  the  people  of  the  country  gener- 
ally, or  to  the  transportation  lines.  As  illustrating  the  operation  of  such 
an  established  principle  of  controlling  freight  rates,  I  will  take  a  promi- 
nent shipping  point — not  Chicago,  lest  1  seem  to  be  arguing  from  a 
Chicago  standpoint  only,  but  Minneapolis,  where  in  some  degree  the 
prevailing  policy  operates  against  the  interests  of  Chicago.  There  are 
three  or  four  railway  lines  operating  between  Minneapolis  and  Chicago 
and  one  or  more  between  Minneapolis  and  Duluth  at  the  head  of  water 
navigation  on  Lake  Superior.  There  is  an  immense  movement  of  flour 
from  Minneapolis  to  the  sea-board  ;  water  rates  from  Duluth  to  Eastern 
points  are  substantially  the  same  as  from  Chicago  to  the  same  points ; 
the  rail  line  from  Minneapolis  to  Duluth  is  about  160  miles ;  to  Chicago 
the  average  of  the  lines  is  about  450  miles.  Now,  if  the  rail  lines  to 
Chicago  were  obliged  to  adjust  their  tariffs  on  the  basis  of  uniform  rates 
per  ton  per  mile,  or  even  approximately  so,  over  their  whole  lines,  it  is 
manifest  that  they  could  not  make  a  rate  from  Minneapolis  to  Chicago 
that  would  command  a  barrel  of  flour  to  be  shipped  beyond  Chicago 
without  cutting  down  all  their  traffic  to  a  ruinously  low  figure.  Whereas 
if  they  are  allowed  to  make  a  rate  to  meet  the  rate  from  Minneapolis  to 
Duluth,  they  are  really  serving  the  miller,  and  through  him  the  wheat 
grower  and  the  consumer  as  well,  at  lower  rates  than  either  would  get 
if  they  were  entirely  out  of  the  competition.  If  they  can  make  a  rate  for 


58  INTERSTATE  -  COMMERCE. 

the  flour  that  will  command  the  bulk  of  the  business,  as  they  do,  and 
that  rate  yields  them  even  a  small  profit,  that  profit  enables  them  to 
grant  lower  rates  than  they  could  otherwise  do  to  their  other  patrons, 
and  so  they  in  turn  are  more  or  less  benefited.  If,  on  the  other  hand, 
the  Minneapolis  rate  is  below  the  actual  cost  of  doing  the  business,  all 
things  considered,  they  will  be  likely  to  recoup  themselves  for  that  loss 
from  their  other  patrons — a  practical  u  robbing  of  Peter  to  pay  Paul," 
a  policy  which  I  think  Government  should  effectually  prohibit.  Sub- 
stantially the  same  condition  of  things  exists  at  many  other  places  in 
the  country  as  I  have  alluded  to  above,  and  should  not  be  ignored  in 
any  intelligent  policy  dealing  with  this  great  question. 

In  the  above  view  of  the  case,  and  for  other  reasons  bearing  in  the 
same  direction,  I  feel  confident  that  it  would  be  a  public  calamity  to 
prohibit  any  railway  line,  whether  engaged  in  interstate  or  only  in 
State  transportation,  from  charging  a  greater  rate  per  mile  or  even  a 
greater  rate  irrespective  of  mileage  for  a  short  than  for  a  longer  haul  j 
but  in  no  case  should  a  rate  for  a  short  distance  or  any  rate  whatever 
be  permitted  which  is  based  on  an  attempt  to  recover  losses  made  by 
some  other  and  lower  relative  rate. 

Now,  as  to  what  methods  are  practical  for  the  fair  and  equitable  ad- 
justment of  the  problem  of  interstate  transportation.  In  discussing  this 
I  shall  go  somewhat  beyond  suggesting  remedies  to  prevent  extortion 
and  unjust  discriminations,  as  those  terms  are  generally  understood ; 
because  1  think  the  time  has  come  when  a  broader  range  of  remedies 
for  existing  evils  should  be  considered  than  simply  preventing  by  a 
.statute  law  embracing  methods  of  proceedings  t<3  give  it  effect,  princi- 
ples already  well  established  by  the  common  law  of  the  civilized  world. 
In  most  cases  where  complaint  is  made  of  excessive  rates  for  transpor- 
tation it  would  probably  be  difficult  to  prove  to  the  satisfaction  of  a 
court  or  jury  that  they  were  extortionate.  There  being  such  a  wide 
range  of  circum stances  in  the  conditions  affecting  different  lines,  and 
at  different  times  of  the  same  line,  what  under  some  circumstances 
would  really  be  but  a  fair  and  reasonable  rate  would  under  differing 
conditions  be  quite  extortionate.  Scarcely  any  two  intelligent  men 
would  fix  the  same  point  as  the  line  between  reasonable  and  extortion- 
ate rates.  And  so,  too,  in  respect  to  unjust  discriminations ;  the  very 
term  implies  that  some  discrimination  is  permissible,  but  concerning 
the  justice  or  injustice  of  a  given  case  men  would  differ.  Hence,  legis- 
lation aimed  simply  at  preventing  extortion  and' unjust  discrimination, 
without  defining  what  extortion  is  or  what  discriminations  are  unjust, 
ivould  be  as  barren  of  practical  results  as  the  principles  of  the  common 
;aw  now  are  in  providing  an  efficient  remedy  for  actual  existing  evils 
in  this  respect. 

A  MAXIMUM  RATE. 

It  seems  to  me  that  any  attempt  by  Congress  to  fix  a  point  in  the 
form  of  a  maximum  rate  which  shall  be  taken  by  the  courts  as  the  line 
between  a  proper  and  an  extortionate  rate  must  be  attended  with  great 
difficulty,  if  indeed  it  is  not  wholly  impracticable,  especially  should 
such  a  rate  be  established  by  law  in  connection  with  a  provision  for 
uniformity  in  the  rate  per  ton  per  mile,  or  something  approaching  that 
idea.  In  determining  such  a  question  by  statute  law,  equity  to  both 
the  carrier  and  the  public  should  be  considered ;  aud  in  adjusting  the 
equities  of  the  case  the  cost  of  doing  the  business,  which  involves  a 
full  understanding  of  the  cost  and  expenses  of  the  line,  the  volume  and 
character  of  the  business  it  is  doing,  and  very  many  other  factors,  must 


INTERSTATE    COMMERCE.  59 

have  their  due  weight,  not  only  as  regards  a  combined  line  as  a  whole, 
but  in  respect  to  every  separate  link  in  it,  which  may  consist  of  many 
Independent  lines,  as,  for  instance,  between  Galveston,  Tex.,  and  Bos- 
toh,  Mass.  The  impossibility  of  this  being  done,  so  as  to  embrace  in 
any  law  a  just  maximum  rate  for  all  business  coming  within  its  pro- 
visions, must  be  manifest  on  a  very  casual  consideration  of  the  subject. 
I  suppose  under  such  a  law  it  would  be  held  that  a  railway  company 
would  be  liable  for  damages  if  it  were  to  refuse  business  tendered  at  a 
rate  the  law  prescribes  as  a  fair  and  equitable  one,  and  also  that  it 
would  be  bound  to  bill  consignments  to  destination  outside  of  its  own 
State;  thus  practically  forcing  any  short  line  to  accept  interstate  trans- 
portation and  its  pro  rata  of  a  through  rate  established  by  law,  which 
to  any  one  would  be  recognized  as  ruinous  to  it.  For  instance,  say  the 
maximum  rate  for  1,000  miles  west  of  2sew  York  was  fixed  at  50  ceiits 
per  100  pounds  on  grain ,  a  very  Irigli  rate.  A  shipment  of  grain  is  oflered 
1,000  miles  from  >sew  York,  but  10  miles  from  the  trunk  line  on  a  short 
but  independent  railroad.  All  it  could  claim  for  its  10  miles  of  haul 
would  be  one-half  of  1  cent  for  100  pounds,  or  not  to  exceed  $2  per  car. 
Tins,  every  one  would  say,  was  absurd,  but  to  my  mind  that  is  where 
the  principle  would  inevitably  lead. 

WHAT  CONGRESS  CAN  DO. 

In  view  of  all  the  complications  of  the  subject,  and  having  due  re- 
gard to  all  the  interests  involved,  my  own  idea  of  what  Congress  can 
and  ought  to  do  is  about  as  follows,  and  in  stating  my  views  in  this  way 
.several  of  your  questions  will  be  incidentally  answered  : 

Enact  a  law  prescribing  adequate  and  easily  enforced  penalties  for  its 
violation,  infraction,  or  evasion,  and  suitable  damages  to  persons  in- 
jured thereby.  Provide  for  the  appointment  of  a  commissiou  of  six  per- 
sons at  an  annual  salary  of  not  less  than  $7,000  each,  to  be  paid  by  the 
United  States ;  two  of  the  commissioners  to  be  selected  from  the  States 
cast  of  the  Allegheny  Mountains  and  north  of  Washington ;  one  from 
the  States  north  of  the  Ohio  Kiver  and  east  of  the  Mississippi ;  one  from 
the  States  south  of  the  Ohio  Kiver  and  Washington,  and  east  of  the  Mis- 
sissippi ;  one  from  the  States  between  the  Mississippi  Eiver  and  the 
Kocky  Mountains ;  and  one  from  the  Pacific  States.  Give  the  commis- 
sioners power  to  employ  a  competent  secretary  and  other  necessary  as- 
sistants as  they  may  deem  proper,  and  to  fix  their  compensation  ;  such 
compensation  to  be  subject  to  the  approval  of  the  Secretary  of  the  In- 
terior, and  to  be  paid  by  the  United  States.  The  commissioners  to  be 
assigned  to  and  required  to  maintain  a  suitable  office  in  the  city  of 
Washington,  in  which  their  regular  meetings  shall  be  held,  and  where 
all  official  communications  shall  be  addressed ;  the  office  to  be  kept  open 
to  the  public  the  same  as  all  other  Government  offices  in  Washington. 
The  commissioners  to  hold  office  for  six  years,  provided  that  of  the  first 
appointments  two  shall  be  designated  to  hold  their  appointments  for  two 
years,  two  for  four  years,'and  two  for  six  years.  Make  it  the  duty. of 
the  proper  officers  of  every  transportation  line  or  company  engaged  in 
interstate  traffic  to  make  to  the  commission  prompt,  full,  and  detailed 
reports  in  respect  to  such  business  transacted  by  it  as  the  commission 
may  from  time  to  time  deem  necessary  for  its  information  in  the  dis- 
charge of  official  duty,  and  which  it  shall  in  a  proper  manner  make  due 
request  for.  And  as  they  may  deem  it  necessary  give  the  commission 
power  to  require  the  production  before  them  of  any  books,  contracts  or 
other  papers  relating  to  interstate  commerce  in  the  possession  or  con- 


60  INTERSTATE   COMMERCE. 

trol  of  any  company,  person,  or  persons  in  the  United  States.  Give  them 
also  power  to  issue  citations  for  the  attendance  before  them  of  any  per- 
son, in  the  same  manner  and  with  the  same  effect  as  if  issued  by  a 
United  States  district  court. 

Provide  that  all  railway  tariffs  for  interstate  transportation,  either 
for  freight  or  passengers,  and  all  changes  in  the  same,  shall,  before  tak- 
ing effect,  be  approved  by  the  commission,  and  that  after  it  goes  into 
effect,  until  changed  by  approval  of  the  commission,  no  deviation  from 
the  rates  so  established  shall  be  permitted  in  any  way,  either  by  charg- 
ing more  or  less  than  such  approved  rates,  directly  nor  indirectly.  All 
tariff's  or  changes  of  tariff's,  so  approved  by  the  commission,  for  the 
transportation  of  passengers  or  freight,  to  be  conspicuously  printed  and 
posted  up  for  the  information  of  the  public  in  all  the  passenger  and 
freight  stations  of  every  railway  company  or  line  to  which  it  applies,  at 
least  one  day  before  it  shall  go  into  effect,  and  be  kept  so  posted  during 
the  time  it  is  in  force.  Permit  any  railway  or  other  transportation  com- 
pany or  line  engaged  in  interstate  transportation  to  establish  and  allow 
drawbacks  or  rebates  from  its  published  tariff*  of  rates,  but  only  on  con- 
dition that  such  rebates  shall  be  approved  by  the  commission  and  shall 
apply  to  any  and  all  shipments  under  substantially  the  same  conditions, 
which  conditions,  and  the  amount  of  rebate  to  be  allowed,  shall  be  spe- 
cifically and  fully  stated  on  the  printed  tariff  posted  in  their  several  sta- 
tions as  herein  required. 

Make  it  the  duty  of  the  commission  to  hear  any  evidence  which  may 
be  submitted  to  it  by  the  officers  of  any  railway  or  other  transportation 
company  or  line,  or  any  other  person  interested,  touching  the  reason- 
ableness of  any  proposed  tariff  or  changes  of  tariff  of  rates  for  interstate 
transportation  which  may  be  submitted  for  its  approval;  their  approval 
or  disapproval  of  the  same  to  be  based  on  the  apparent  justice  or  injus- 
tice of  the  rates  proposed  from  the  evidence  so  presented,  or  from  other 
facts  obtained  by  them  from  other  sources.  The  approval  or  disapproval 
of  proposed  rebates  from  tariff  rates  as  herein  provided  to  be  based  on 
like  evidence  as  that  relating  to  the  tariff'  of  rates  to  be  charged.  All. 
persons  giving  evidence  before  the  commission  to  be  required  to  do  so 
under  oath  and  subject  to  such  proper  cross-examination  as  the  repre- 
sentatives of  opposing  interests  may  see  fit  to  make  in  the  presence  of 
the  commission.  Give  the  commission  power  to  issue  authority  and  di- 
rection for  the  taking  of  depositions  of  persons  whose  evidence  on  the 
question  is  deemed  by  them  of  sufficient  importance  to  justify  such  pro- 
ceesings  in  the  same  manner  as  judges  of  the  United  Stages  district 
courts. 

In  case  any  tariff  or  changes  of  tariff  or  scale  of  rebates  submitted 
to  the  commission  for  its  approval  shall  not  be  approved  by  it,  the 
commission  shall  indicate  in  particular  what  changes  it  deems  proper 
to  be  made  in  the  same,  and  it  shall  be  the  duty  of  the  company  or  com- 
panies, line  or  lines  submitting  the  tariff  so  disapproved,  to  adopt  the 
modifications  so  indicated  by  the  commission.  All  such  decisions 
should,  however,  be  subject  to  appeal,  either T>y  any  transportation  line 
interested  or  by  any  citizen  of  the  United  States  interested,  to  the 
court  in  the  city  of  Washington,  and  thence  to  the  Supreme  Court  of  the 
United  States  if  the  appellant  or  the  commission  so  elects.  But  pending 
such  final  appeal  and  reversal  of  the  decision  of  the  commission  in  re- 
spect to  the  rates  io  question,  the  decision  of  the  commission  shall  stand 
and  be  respected  by  the  parties  in  interest  the  same  as  if  fully  concurred 
in  by  the  parties  originally  appealing  therefrom. 

Some  such  provisions  embodied  in  a  law  would,  in  my  judgment,  if 


INTERSTATE    COMMERCE.  61 

faithfully  carried  out,  meet  all  the  requirements  of  regulation  now  neces- 
sary to  be  imposed  on  the  traffic,  and  I  have  little  doubt  but  that  in  the 
main  they  would  meet  the  approval  not  only  of  the  people  but  of  the 
railway  interests  as  well.  The  machinery  suggested  is  not  intricate. 
The  end  plainly  sought  is  to  do  even-handed  justice  to  both  the  railway 
interests  and  their  patrons.  Both  have  rights  which  are  entitled  to 
respect  and  consideration.  Many  of  the  companies'  charters,  perhaps 
most  of  them,  give  the  right  to  the  companies  to  fix  their  own  tariff 
rates,  which  it  is  now  pretty  well  settled  means  reasonable  and  just 
rates,  and  this  suggestion  leaves  them  perfectly  free  to  do  that,  under 
-A  legal  supervision  applying  only  to  the  justice  and  equity  of  the  rates 
they  may  propose  to  charge. 

Undoubtedly  other  provisions  will  suggest  themselves  as  proper  to 
be  embraced  in  any  recommendation  your  committee  may  be  inclined 
to  make  to  Congress,  even  though  in  the  main  this  should  meet  their 
approval.  One  now  suggests  itself  to  me,  which  I  had  overlooked ;  that 
is,  that  the  commission  should  make  annual  reports  to  Congress  of  the 
general  scope  of  their  proceedings,  and  recommend  from  time  to  time 
such  further  legislation  as  it  may  deem  to  be  necessary. 

As  to  the  reasonableness  of  rates  now  existing,  I  can  only  say  in  a 
general  way  that  the  through  rates  to  the  seaboard  are  probably  as  low 
as  can  be  reasonably  asked.  Local  rates  are  in  many  cases  unreasonable, 
in  fact  extortionately  high  under  the  developments  of  economies  in  rail- 
way operating  in  the  past  few  years ;  in  some  cases  these  apply  to  inter- 
state traffic,  i.  e.,  rates  from  points  in  one  State  to  another  though  com- 
paratively a  short  haul. 

Under  such  a  law  as  I  have  suggested  there  would  be  little  object  in 
pooling  interstate  traffic.  This  is  only  made  supposably  necessary  by 
the  fear  of  cutting  any  agreed  rates ;  but  for  that  no  railway  line  would 
probably  care  to  go  into  a  pool.  Without  some  such  law  I  do  not  see 
any  way  to  prevent  some  form  of  pooling.  I  do  not  think  pooling  is 
ever  resorted  to  in  order  to  extort  unreasonable  rates,  but  rather  to  pro- 
tect the  lines  against  each  other  at  competitive  points.  I  cannot  see 
any  other  way  than  "something  like  what  I  have  outlined  to  control  the 
subject,  and  doubt  if  publicity  of  pooling  terms  would  accomplish  any 
good  end.  Every  shipper  should  be  accorded  the  right  to  prescribe 
the  entire  route  over  which  he  desires  his  shipment  to  go,  and  should 
be  fully  protected  by  law  in  that. 

Concessions  should  be  made  to  large  shippers  only  in  the  way  of 
drawbacks,  under  published  conditions,  similar  to  what  I  have  sug- 
gested. These  should  apply  to  all  shippers  coming  within  the  pub- 
lished conditions  alike.  Nothing  in  any  way  leaning  to  favoritism 
should  be  tolerated.  One  of  the  real  abuses  of  the  present  railway  sys- 
tem is  its  unfair  favoritism  shown  to  certain  persons  and  firms,  which 
enables  them  to  undersell  or  overbid  others,  and  in  that  way  grinding 
out  small  dealers,  making  the  strong  stronger  and  utterly  destroying 
the  weaker. 

I  do  not  see  any  good  reason  for  requiring  any  particular  form  or 
uniformity  in  keeping  transportation  books  or  accounts.  If  the  lines 
are  required  by  law  to  supply  such  information  as  the  commission  may 
call  for,  with  proper  penalties  for  neglect  or  refusal  to  do  so,  they  will 
be  able  to  do  it  from  their  own  chosen  methods  of  book-keeping.  There 
is  no  valuable  information  needed  by  the  commission  that  every  line 
cannot  now  supply  if  it  chooses  to  do  so. 

The  range  of  information  needed  by  the  Government  or  its  commis- 
sioners can  hardly  be  indicated  with  precision  in  the  absence  of  knowl- 


62  INTERSTATE    COMMERCE. 

edge  as  to  what  the  law  may  be,  but  will  become  apparent  as  the  opera- 
tion of  the  law  progresses.  I  do  uot  think  it  wouM  be  wise  to  particu- 
larize in  the  law  just  what  information  will  be  required. 

I  hardly  need  enter  on  a  discussion  of  the  importance  of  the  Govern- 
ment's aiding  in  developing  the  fullest  capacity  of  waterways  wherever 
practicable.  These  more  than  anything  else  tend  to  cheapen  freight 
rates,  and  their  influence  is  felt  at  points  far  removed  from  their  course. 
Mr.  Albert  Fink  some  time  since  very  truly  remarked : 

The  water- routes  not  only  control  the  tariffs  of  their  immediate  railroad  competi- 
tors at  points  where  they  can  render  like  service  to  the  same  people,  but  their  influ- 
ence reaches  directly  and  indirectly  to  the  remotest  parts  of  the  country. 


CHARLES  RIDGELY'S  STATEMENT. 

Stat  ment  o    Charles  Ridgely,  of  Springfield,  JW.,  president  of  the  Spring - 

Jield  Iron  Company. 

I  have  the  honor  to  acknowledge  the  receipt  of  your  circular  of  April 
10,  propounding  certain  inquiries  in  regard  to  the  matter  which  it  has 
been  given  to  your  committee  to  investigate,  and  in  reply  I  have  to  say 
that  as  a  Western  man  I  believe  that  I  appreciate  the  importance  to  the 
West  that  your  deliberations  in  regard  to  the  control  of  interstate  com- 
merce should  lead  you  to  proper  conclusions.  The  underlying  question, 
on  which  the  development  of  the  great  grain  growing  States  of  the 
West  has  altogether  depended,  has  been  as  to  the  possibility  of  sending 
our  surplus  products  to  European  markets — a  question  of  long-distance 
transportation— of  commerce,  not  only  between  the  States,  but  across  the 
ocean  and  with  foreign  nations.  To  solve  this  question  our  reliance  was 
primarily  upon  nature's  waterways,  then  also  upon  the  canals,  and 
afterwards  upon  the  railroads,  acting  in  conjunction  with  the  other  two. 
When  the  railroads  were  built  these  States  were  purely  agricultural, 
and  the  only  need  for  the  roads  was  to  aid  in  furnishing  to  that  interest 
its  necessary  supplies  and  to  carry  its  products  to  market.  At  first  all 
of  the  supplies  in  the  way  of  manufactured  articles,  as  well  as  many 
articles  of  food,  and  large  quantities  of  fuel,  were  brought  from  long 
distances,  and  mainly  either  from  the  Eastern  States  or  from  Europe. 
The  population  having  been  purely  agricultural  the  development  was 
wholly  of  that  interest,  with  the  exception  of  the  small  number  of  per- 
sons and  such  a  limited  amount  of  capital  as  was  necessary  to  serve  its 
needs  in  the  way  of  transportation  and  commercial  facilities.  How  well 
this  transportation  problem  has  been  worked  out  the  present  condition 
of  the  West  can  tell. 

That  it  has  not  borne  heavily  on  the  agriculturists  the  increase  in  the 
value  of  their  lauds  bears  witness.  It  is  also  notorious  that  it  has  not 
been  the  good  fortune  of  those  who  invested  their  money  in  railroads  to 
have  enriched  themselves  thereby.  All  of  the  States  have  framed  laws 
to  encourage  the  building  of  railroads.  This  encouragement  was  all  of 
the  same  kind.  It  all  held  out  the  prospect  of  large  profits  to  be  real- 
ized. And  it  is  notorious  that  no  money  could  have  been  found  with 
which  to  execute  such  projects,  had  it  been  understood  that  if  they  suc- 
ceeded the  promoters  of  them  were  to  be  limited  to  the  legal  rate  of  in- 
terest on  their  investments,  while  if  they  failed  they  were  to  utand  their 
own  losses.  As  it  was  it  was  only  occasionally  that  a  contractor  or  a 
lucky  speculator  made  money.  As  a  rule  the  roads  have  been  built  in 


INTERSTATE    COMMERCE. 


advance  of  the  needs  of  the  country,  and  the  people  who  furnished  the 
money  with  which  to  build  them  have  lost  by  it.  The  roads  were  not, 
at  first,  able  to  meet  their  obligations,  and  they  were  generally  sold 
under  foreclosures  of  their  mortgages,  and  reorganized  before  they  be- 
came able  to  maintain  themselves.  The  later  development  of  the  West 
has  proceeded  from  the  movement  on  the  part  of  its  inhabitants  to  man- 
ufacture on  the  spot  such  articles  as  are  needed  to  meet  the  wants  of  the 
different  communities,  and  to  supply  themselves  with  the  various  finan- 
cial facilities  which  are  needed  in  the  transaction  of  the  daily  business 
of  the  country.  The  land  now  being  mainly  occupied,  and  in  cultiva- 
tion, the  increase  of  the  agricultural  population  is  proceeding  at  a  slower 
ratio,  and  it  is  not  surprising  that  the  returns  of  the  last  census  showed 
that  the  urban  population  of  the  United  States,  which  in  1790  consti- 
tuted but  3.3  per  cent,  of  the  whole,  has  increased  proportionately  with 
every  decade,  and  that  it  reached  20.9  per  cent,  in  1870,  and  22£  per 
cent,  in  1880.  This  has  occurred  in  accordance  with  a  natural  princi- 
ple, and  a  continuance  of  this  same  effect,  following  from  the  same  cause, 
may  be  looked  for  for  all  time  to  come.  The  tendency  of  the  cities  to 
grow  may  be  expected  to  continue,  while  the  population  in  the  country 
will  increase  at  a  comparatively  slow  rate.  Eeturns  also  show  that  the 
number  of  persons  returned  as  actually  engaged  in  the  following  named 
occupations  in  1870  and  1880  were  as  follows : 


Occupation. 

1870. 

1880. 

Increase. 

Agriculture           

5  922  471 

7,  670  473 

Per  cent. 
29  51 

Professional  and  personal  service  

2,684  793 

4.  074,  238 

51.75 

Trade  and  transportation    

1,  191,238 

1,  810.  256 

51.97 

Mflniiftif  hiring,  ni'V-hnnioal,  flnd  mining  .  .     ........     .   .  , 

2,  707,  421 

3,  837,  112 

41.72 

Total  

12,  505,  923 

17,  392,  099 

39.07 

Also  that  in  the  State  of  Illinois  the  number  of  persons  reported  as 
engaged  in  agriculture  is  436,371,  against  563,409  engaged  in  the  other 
occupations  referred  to  above.  Unfortunately  the  data  are  not  furnished 
for  a  comparison  with  1870,  in  this  State.  The  value  of  farm  products 
in  Illinois  for  the  census  year  was  $203,980,137,  while  the  value  of  the 
articles  manufactured  in  the  city  of  Chicago  alone  for  the  same  year 
was  $249,022,948.  This  result  was  accomplished  by  3,519  concerns,  who 
are  credited  with  a  capital  of  $08,836,835,  and  employing  79,4i4  hands. 

The  mileage  of  all  the  railroads  of  the  United  States  at  the  close  of 
the  year  1883  had  reached  121,592,  and  now  exceeds  125,000. 

The  roads  built  up  to  1883  had  cost  $7,500,000,000,.  a  sum  which  is 
equal  to  one  fifth  of  the  accumulated  capital  of  the  whole  country ;  and 
this  takes  no  account  of  the  amount  invested  in  all  of  the  various  manu- 
facturing and  other  concerns  that  depend  for  their  living  on  furnish- 
ing supplies  for  the  operation  of  the  railroads.  Six  hundred  and  fifty 
thousand  people  are  directly  engaged  in  operating  the  railroads.  It  can 
only  be  conjectured  as  to  how  many  there  are  who  join  in  the  proprie- 
torship of  the  immense  sum  which  represents  the  cost  of  the  roads,  and 
are  to  a  greater  or  lesser  extent  dependent  upon  the  income  to  be  de- 
rived from  the  investment  year  by  year.  None  of  the  persons  repre- 
sented by  these  enormous  figures  are  engaged  in  agriculture.  On  the 
contrary,  they  are  the  consumers  who  require  the  nine- tenths  of  the  prod- 
ucts of  our  agriculture  which  is  consumed  at  home.  The  other  tenth 
goes  to  fill  our  quota  of  the  foreign  demand.  These  are  the  persons  who 


64  INTERSTATE    COMMERCE. 

give  that  diversity  to  our  industries  which,  more  than  anything  else, 
adds  to  the  value  of  farm  products,  to  the  income  of  the  farmer,  and  to 
the  value  of  his  lands.  It  is  evident  that  if  this  be  true  it  is  of  the 
utmost  importance  to  the  farmer  that  his  large  class  of  consumers  should 
be  kept  up  to  the  highest  condition  of  consuming  capacity,  and  that  if 
anything  happens  to  distress  them  in  their  circumstances  the  evil  effect 
will  be  felt  by  the  agricultural  community  in  their  inability  to  take  and 
pay  for  the  produce  which  they  ordinarily  consume.  All  of  the  differ- 
ent classes  are  so  bound  together  in  their  interests  that  the  prosperity 
of  any  one  is  shared  by  all  of  the  others,  and  any  calamity  or  distress 
to  one  affects  the  whole,  affects  them  certainly,  and  with  a  rapidity  that 
increases  as  our  relations  grow  more  intimate  and  our  means  of  com- 
munication improve. 

THE   RAILROADS  AND   THE  FARMERS. 

Holding  these  views,  I  do  not  think  that  there  has  been  in  the  past, 
nor  is  there  now,  any  very  great  cause  of  complaint  as  to  the  methods 
of  operation  of  transportation  companies  in  this  section  of  country  in  so 
far  as  the  transportation  of  grain  or  farm  products  is  concerned.  The 
railroads  were  mostly  built  to  accommodate  this  traffic.  Their  sole  re- 
liance for  income  has  been  upon  its  development,  and  the  result  to  those 
investing  their  money  in  the  roads,  as  compared  with  that  realized  from 
an  investment  in  lands,  shows  that  the  rates  have  not  been  unfavorable 
to  the  farmers.  The  railroads  first  made  farming  possible  in  a  large 
portion  of  this  State.  They  brought  the  lauds  into  market,  brought  in 
the  materials  for  the  houses  and  the  fences,  as  well  as  the  fuel  to  pro- 
tect the  new  settlers  from  the  cold  winter  winds  that  sweep  across  the 
prairies.  They  also  found  a  market  for  the  products,  and  at  such  a 
charge  that  the  lands  have  increased  in  value  near  fifty-fold.  Now,  that 
the  lands  are  all  occupied  and  the  farms  established,  they  are  continu- 
ing their  beneficial  work  by  transporting  the  consumers  of  this  produce 
from  their  European  homes  to  our  very  midst,  where  their  incomes  will 
be  doubled  and  trebled,  and  where  they  will  not  only  be  that  much  bet- 
ter customers  for  our  products,  but  where  they  must  be  customers  of 
ours  and  not  of  other  nations,  our  competitors.  It  has  been,  and  is,  a 
question  as  to  whether  we  can  retain  our  supremacy"  in  the  grain  markets 
of  the  world,  and  it  must  give  every  thinking  person  satisfaction  to  see 
that,  no  matter  how  that  may  turn  out,  the  country  is  tilling  up  with  a 
population  so  greatly  diversified  in  its  interests  and  pursuits  that  we 
are  becoming  more  and  more  independent  of  foreign  markets  year  by 
year. 

As  already  said,  the  interests  of  all  the  different  classes  are  bound 
up  together.  It  is  therefore  to  the  interest  of  the  farmer,  as  well  as  to 
that  of  persons  engaged  in  any  of  the  other  occupations,  that  the  railroads 
should  have  fairly  remunerative  rates  for  the  traffic  which  they  do.  This 
will  protect  the  operatives,  as  well  as  the  great  number  of  investors  who 
own  the  capital  which  is  invested  in  the  roads^  and  all  of  that  large  class 
of  business  men  who  furnish  supplies  to  the  railroads,  from  the  losses 
and  other  bad  effects  to  which  they  are  now  subjected  from  the  constantly- 
recurring  railroad  wars.  It  is  obvious  that  these  classes  do  suffer  se- 
verely from  this  cause.  But  I  am  of  the  opinion  that  the  losses  occa- 
sioned to  the  general  business  of  the  country  are  no  less  serious  or 
important.  We  are  just  passing  through  a  period  of  dullness  and  de- 
pression in  business  which  extends  to  every  part  of  our  country  and 
which  affects  every  interest  of  every  kind.  There  is  no  doubt  but  that 


INTERSTATE    COMMERCE.  65 

•his  trouble  has  "been  tooth  prolonged  and  intensified  by  the  struggle 
between  what  are  called  the  trunk  lines,  which  probably  had  its  origin 
in  the  disturbance  caused  by  the  building  of  the  West  Shore  and  Buf- 
falo Railroad. 

And  this  brings  me  to  say  that  the  necessity  seems  to  be  urgent  that 
the  indiscriminate  building  of  railroads  should  stop.  The  country  is 
now  for  the  most  part  fairly  well  supplied  with  railroad  facilities.  The 
building  of  unnecessary  roads  absorbs  capital  that  can  be  more  usefully 
employed  in  other  directions.  It  is  inevitably  followed  by  a  railroad  war; 
it  creates  an  undue  competition,  and  cripples  roads  already  existing  by  a 
division  of  the  traffic,  so  that  the  public  are  not  well  served  by  either  the 
old  roads  or  the  new  ones.  It  does  much  to  bring  on  what  we  have  come 
to  call  financial  panics,  and  it  adds  to  the  general  distrust  and  retards  our 
return  to  prosperity  in  times  of  commercial  depression  by  the  disasters 
which  it  brings  to  one  or  both  of  the  companies  involved.  Let  us  bj1 
all  means  have  the  advantages  of  competition,  but  let  us  be  careful,  leal 
by  having  too  much  of  it  we  so  exhaust  the  competitors  that  they  wil. 
be  Compelled  to  combine  in  order  that  either  may  live.  This  is  a  ques- 
tion which  belongs  more  properly,  perhaps,  to  the  State  legislature  than 
to  Congress.  But  the  evil  complained  of  is  a  crying  one  and  works 
more  mischief  to  the  people  of  the  West  than  they  know  of. 

1  also  think  that  the  danger  of  unjust  discrimination  just  now  is  much 
greater  in  regard  to  merchandise  and  manufactured  articles  coming 
west  than  on  any  other  products  going  east.  East-bound  products 
go  for  the  most  part  to  the  great  market  places,  and  bear  a  well-known 
value.  The  rates  of  freight  are  primarily  controlled  by  the  water  rates, 
und  are  very  carefully  adjusted  as  between  the  principal  shipping 
points,  so  that  each  shall  surely  enjoy  the  trade  naturally  belonging  to 
it.  But  with-west  bound  merchandise  or  manufactured  articles  the 
influences  are  more  insidious,  and  freight  rates  can  be,  and  constantly 
are  made,  as  between  different  roads,  or  as  between  different  points  on 
the  same  road,  which  control  not  only  the  fortunes  of  individual  mer- 
chants or  manufactures  but  also  the  location,  growth,  and  prosperity 
of  cities  and  towns.  In  this  direction  I  think  that  there  is  discrimina- 
tion that  needs  correction. 

WHAT   A    COMMISSION  MIGHT  DO. 

As  to  the  best  method  of  preventing  extortion  or  discrimination,  I 
speak  with  much  hesitation,  never  having  been  directly  engaged  in  the 
operation  of  any  railroad,  nor  having  had  in  any  public  capacity  to 
study  the  working  of  laws  designed  for  that  purpose.  It  seems  to  me, 
however,  that  in  a  matter  of  so  much  importance,  and  which  up  to  .this 
time  has  been  studied  by  so  few  persons,  and  which  is  consequently  so 
little  understood,  the  United  States  Government  should  proceed  slowly 
and  with  great  caution.  Less  damage  to  business  is  likely  to  occur 
from  doing  too  little  in  the  way  of  regulation  of  interstate  commerce 
than  from  doing  too  much.  There  are  doubtless  evils  to  be  corrected 
and  rates  of  transportation  have  doubtless  been  made  that  are  based 
on  false  principles ;  but  large  investments  may  have  been  made,  and 
important  undertakings  in  business  assumed,  depending  upon  a  con- 
tinuance of  these  rates  and  practices,  and  it  is  due  to  the  parties 
interested  that  nothing  shall  be  done  hastily  nor  without  the  fullest 
investigation  nor  until  the  parties  interested  can  be  heard,  and  proper 
.consideration  given  to  the  preservation  of  their  interests. 

16232  AP 5 


66  INTERSTATE    COMMERCE. 

I  should  think,  however,  that  it  would  be  highly  proper  for  Congress 
to  form  a  commission  to  take  the  whole  subject  into  consideration. 
This  commission  might  at  first  require  that  all  railroad  companies 
should  report  to  them  all  of  their  tariff's,  and  all  the  changes  made  in 
them.  They  could  then  suggest  such  changes  as  seemed  to  them  to  be 
desirable.  With  the  large  field  which  they  would  constantly  have  in 
view,  it  might  be  expected  that  their  experience  would  accumulate 
rapidly  and  their  suggestions  would  soon  become  valuable;  and  it 
might  be  hoped  that  the  railroad  companies  would  appreciate  them  and 
in  a  great  measure  adopt  them.  This  result  has  followed  under  similar 
circumstances  in  some  of  the  States.  They  could  also  make  all  tariffs 
public,  require  reports  from  the  railroads  of  any  character  needed  to 
enable  Congress  and  the  people  to  judge  of  their  condition  and  their 
manner  of  doing  business,  and  report  all  to  Congress,  with  such  recom- 
mendations as  to  legislation  as  their  constantly  accruing  experience 
might  show  to  be  safe  and  proper.  They  might  also  hear  complaints, 
as  is  the  case  in  this  State,  and,  when  necessary,  bring  such  matters  as 
may  require  such  treatment  to  the  attention  of  the  United  States  courts, 
giving  the  complainants  such  assistance,  in  the  way  of  legal  services 
and  in  the  payment  of  expenses,  as  may  be  found  necessary  to  enable 
them  to  prosecute  to  final  judgment  such  cases  as  involve  principles  of 
importance  to  the  public.  It  might  be  hoped  that  a  commission  formed 
upon  these  principles,  and  composed  of  carefully  selected,  competent 
men,  might  take  up  this  subject  and  gradually  get  it  under  such  con- 
trol as  to  meet  the  reasonable  requirements  of  the  public,  including*  all 
the  various  interests  involved;  and  the  railroads  themselves,  from  hav- 
ing been  a  little  restive  at  first  under  the  control  exercised  over  them, 
might  be  expected  to  come  to  appreciate  the  advantages  that  would 
accrue  to  them  from  the  protection  against  sudden  and  violent  fluctua- 
tions in  rates,  and  to  co-operate  with  the  commission  in  perfecting  the 
system.  1  would  not  think  it  advisable  to  give  this  commission  the 
right  to  make  the  tariff's  immediately  upon  its  organization,  for  fear  that 
no  body  of  men  could  at  once  be  found  sufficiently  versed  in  the  ques- 
tion of  interstate  commerce  to  enable  them  to  intelligently  deal  with  so 
complicated  a  subject,  and  to  whom  a  power  so  great,  and  touching  so 
many  important  interests,  could  at  once  be  intrusted.  My  own  ex- 
perience, which  coincides  with  that  of  many  other  large  shippers,  was 
that  the  first  effect  of  the  tariff  made  by  the  board  of  railroad  and  ware- 
house commissions  in  this  State  was  injurious  to  the  interests  which  I 
represented,  and  I  have  not  only  had  occasion  myself  to  try,  but  I  have 
also  joined  others  in  earnest  efforts,  more  than  once,  to  have  the  new 
tariff'  set  aside  and  the  old  order  of  things  restored. 

In  reply  to  your  second  question,  I  have  to  say  that  I  have  no  means 
of  accurately  judging  as  to  the  reasonableness  of  the  rates  now  charged 
on  local  and  through  traffic  ;  but,  so  far  as  I  know,  there  is  more  com- 
plaint on  inequality  of  west-bound  than  on  east  bound  rates. 

It  seems  to  me  that  it  should  be  required  by  law  that  publicity  should 
be  given  to  all  rates,  and  that  the  fewest  possible  number  of  changes 
should  be  made,  so  that  the  utmost  stability  should  be  given  to  the 
rates.  This  item  of  stability  is  one  of  the  first  importance.  We  may 
hope  to  secure  it  under  the  operation  of  a  commission  at  no  very  dis- 
tant da'y;  but,  for  the  present,  I  would  fear  to  forbid  changes  without 
notice,  not  knowing  but  that  the  exigencies  of  the  railroad  service,  as 
now  conducted,  sometimes  requires  very  prompt  action.  All  such 
changes,  however,  should  be  made  public  as  soon  as  made. 


INTERSTATE    COMMERCE.  67 

THE   BASIS   OF   RATES. 

The  question  raised  in  your  fifth  interrogatory  seems  to  nie  to  be  very 
difficult  to  answer,  unless  we  may  assume  that  the  rates  have  in  the 
main  already  been  arranged  by  the  railroad  companies  in  accordance 
with  the  practical  experience  of  themselves  and  their  customers,  having 
due  regard  to  all  of  the  elements  of  cost  and  other  conditions  that  should 
have  a  bearing  on  the  rates  to  be  charged  on  every  kind  of  traffic. 
Some  classes  of  freight  will  stand  a  higher  rate  than  others,  and  it 
seems  as  if  a  larger  percentage  of  the  various  expenses  that  go  to  make 
up  the  cost  of  conducting  the  business  of  a  railroad  company  must, 
almost  of  necessity,  be  charged  upon  certain  classes  of  traffic  than  upon 
others.  Passengers  are  charged  more  in  proportion  to  the  cost  of  trans- 
porting them  than  is  freight.  Light,  valuable,  bulky  articles  pay  better 
profit  to  the  carriers  than  do  coal  or  stone  or  coarse  freights  of  any 
kind.  The  rates  on  grain  may  not  be  more  than  fairly  remunerative 
when  the  grain  markets  are  active  and  the  movement  is  i'ull  and  strong; 
yet  when  the  markets  are  depressed  the  rates  must  be  lowered  or  the 
grain  will  not  move.  The  rate  on  a  car  bound  east  may  be  inordinately 
low,  and  yet  it  may  be  a  matter  of  necessity,  and  at  the  same  time 
good  policy,  to  make  a  rate  only  half  as  great  in  order  to  induce  the 
shipment  of  a  car-load  of  coal  or  salt  or  lumber  in  the  empty  car  on  the 
return  trip.  I  know  that  there  is  a  flavor  of  extortion  about  the  prop- 
osition that  even  very  low  rates  may  be  advanced  for  no  other  reason 
than  that  under  changed  conditions  the  traffic  will  bear  it.  But  dis- 
guise it  how  we  will,  men  in  all  classes  of  business,  and  professional 
men  as  well,  are  guided  to  a  certain  extent  in  making  their  charges  by 
a  consideration  of  what  the  customer  can  aiford  to  pay.  In  some  aspects 
of  the  case  the  principle  is  .not  correct,  but  there  are  exceptions,  similar 
to  those  which  1  have  noted,  in  which  the  parties  who  pay  the  highest 
ra  t  es  ha  ve  no  cause  of  complaint,  because  the  money  earned  from  the  other 
parties  helps  to  pay  expenses  and  makes  it  possible  to  give  them  a  rate 
which  would  not  be  possible  if  the  carrier  were  confined  to  such  a  traffic 
as  their  own  would  be.  This  whole  question,  however,  may  be  more 
properly  one  for  the  decision  of  an  expert  railroad  accountant  than 
for  me. 

It  would  appear  to  be  proper  to  abolish  all  rebates  and  drawbacks, 
except  such  as  may  be  necessary  to  correct  errors  or  something  of  that 
kind.  The  rates  should  be  uniform,  open,  and  public,  and  should  be 
paid  in  lull  once  for  all,  and  no  drawbacks  allowed. 

As  previously  stated,  I  believe  that  the  best  interests  of  all  will  be 
promt  ted  by  fair  and  reasonably  remunerative,  and  at  the  same  time 
stable,  rates.  If  the  danger  of  extortion  can  be  guarded  against  by  the 
coin  mission,  backed  up  hy  the  United  States  courts,  either  with  or  with- 
out further  legislation,  I  think  that  the  pools  should  be  legalized,  as  an 
aid  to  the  railroads  to  secure  their  maintenance,  and  that  the  railroads 
should  then  be  given  an  opportunity  to  arrange  the  rates  with  their 
customers.  If  they  fail,  after  a  fair  trial,  it  will  then  be  time  for  the 
(iovernuient  to  interfere.  Business  men  generally  prefer  to  manage 
their  a  Hairs  in  their  own  way,  and  without  governmental  aid  or  interfer- 
ence ;  and  I  would  much  prefer  to  see  them  have  a  fair  chance  to  settle 
this  question  among  themselves  than  to  attempt  to  control  it  bylaw. 
In  my  judgment  it  should  be  the  duty  of  Congress,  as  well  as  of  the 
State  legislatures,  to  pass  laws  for  the  prevention  of  fraud  and  imposi- 
tion, and  not  to  hamper  the  people  unnecessarily  in  the  transaction  of 
their  daily  business.  It  iuay  be  assumed  that  the  persons  engaged  in 


68  INTERSTATE    COMMERCE. 

business  approach  the  questions  involved  in  their  daily  experiences  with 
more  or  less  preparation  of  a  kind  to  fit  them  to  deal  with  them ;  and 
it  may  also  be  assumed  that  they  will  understand  the  interests  which 
they  have  under  constant  consideration  better  than  can  an.\  set  of  legis- 
lators who  hold  for  the  most  part  biennial  sessions,  and  who  have  not 
generally  had  the  kind  of  experience  calculated  to  enable  them  to  fully 
comprehend  the  questions  involved.  In  business  matters  I  am  decid- 
edly of  the  opinion  that  the  best  government  is  that  which  governs  least. 

Shippers,  in  my  judgment,  should  have  the  right  to  select  the  routes 
in  full  over  which  their  consignments  shall  go. 

In  answer  to  your  ninth  question,  it  is  hard  to  say  by  what  .system  a 
uniform  system  of  rates  can  be  best  secured.  But  it  might  be  hoped 
that  such  a  system  would  gradually  grow  out  of  the  workings  of  the 
commission  heretofore  referred  to. 

I  also  think  that  the  matter  of  charging  proportionally  more  for  a 
short  than  for  a  long  haul  might,  for  the  present  at  least,  be  left  to  the 
railroads,  subject  to  such  influences  as  the  commissioners  might  be  ex- 
pected to  bring  to  bear  upon  them.  The  interests -of  this  section  of 
country  are  on  the  long-haul  side.  The  railroads  have  during  the  past 
year  been  engaged  in  an  effort  to  carry  a  very  large  crop  of  cereals  from 
this  country  to  a  foreign  market,  which  has  been  lower  than  for  a  century 
past.  To  do  this  would  naturally  require  very  low  rates.  It  can  be 
conceived  that  it  would  not  be  possible  to  give  to  a  miller  at  Rochester, 
or  Albany,  or  Poughkeepsie,  for  instance,  the  same  rates  per  ton  per 
mile  on  flour  as  to  one  at  Minneapolis ;  and  yet  that  the  rates  to  each 
could  be  made  more  favorable  because  of  the  business  of  the  other.  The 
rates  to  the  local  millers  may  be  no  more  than  reasonable,  and  yet  the 
necessities  of  the  case  may  require  that  the  through  flour  shall  be  car- 
ried at  a  proportionately  less  rate,  or  not  at  all.  The  through  freight 
swells  the  volume  of  business,  consequently  it  lessens  the  cost  at  which 
it  can  be  done;  and  it  makes  a  lower  rate  possible  on  the  local  busi- 
ness than  could  otherwise  be  made.  If  this  matter  is  arranged  in  this 
way  it  should  also  be  borne  in  mind  that  the  commission  can  always  be 
depended  on  for  a  remedy  for  extortion  if  that  be  attempted. 

It  does  not  seem  as  if  any  concessions  should  be  made  to  large  shippers 
over  smaller  ones,  except  such  as  legitimately  ensue  from  the  less  cost 
of  handling,  &c.  These  concessions  should  be  made  public  and  alike 
to  all. 

Neither  does  it  seem  important  that  all  corporations  engaged  in  in- 
terstate commerce  should  keep  an  uniform  system  of  accounts.  They 
should  be  required  to  make  an  uniform  set  of  reports  to  the  commission 
and  to  keep  their  books  as  their  several  interests  may  require. 

THE  INFLUENCE   OF   THE  WATER  ROUTES. 

I  do  not  think  that  too  much  emphasis  can  be  given  to  the  impor- 
tance of  developing  and  maintaining  a  system  of  water  routes  for  the 
transportation  of  freight  in  the  West.  All  of  the  freight  rates  in  this 
section  of  country  have  always  been  controlled  primarily  by  the  rates  on 
the  Great  Lakes  and  the  Mississippi  River.  The  influence  of  these  great 
waterways  in  fixing  rates  has  been  as  beneficial  as  it  has  been  can- 
stant.  A  similar  influence  has  been  exerted  by  the  canals,  anil  this 
can  be  extended  and  increased  by  the  opening  of  new  canals  in  such 
directipns  as  will  bring  large  and  important  scopes  of  territory  under 
their  influence.  The  cost  of  such  improvements  would  come  back  to 
the  people  many  times  over,  in  the  reduced  rates  of  freight  which  they 
would  secure,  even  if  all  of  the  freight  went,  as  now,  by  rail,  and  the 
canals  were  unused. 


INTERSTATE  COMMERCE.  69 


THE  TOLEDO  PKODUCE  EXCHANGE. 

Statement  submitted  by  the  Toledo  Produce  Exchange,  Toledo,  Ohio,  by 
Denison  B.  Smith,  secretary. 

RECKLESS   RAILWAY  BUILDING. 

Methods  of  easy  and  economical  transport  of  the  products  of  the  soil 
and  of  manufactures  are  the  basis  and  bulwark  of  the  prosperity  and 
growth  of  any  nation.  That  maxim  can  be  applied  to  our  country  with 
singular  justice.  The  necessities  of  our  widely  extended  domain  have 
stimulated  the  enterprise  of  our  people  in  the  line  of  railroad  building, 
not  only  greatly  beyond  historical  precedents,  but  beyond  the  just 
bounds  of  the  requirements  of  the  country,  of  prudence,  safety,  aud 
profit.  We  have  continued  to  build  roads  until  this  interest  has  over- 
loaded itself.  The  manufacturing  of  railways  for  sale,  at  large  profits, 
has  heretofore  presented  captivating  allurements,  and  this  industry,  like 
other  manufacturing  interests,  has  undoubtedly  been  pushed  more  rap 
idly  than  the  growth  of  the  traffic  that  supports  them.  Projects  involv- 
ing immense  sums,  and  in  sections  of  the  country  already  provided  with 
adequate  facilities,  have  attracted  capital  and  have  been  completed. 
Lines  of  railways,  fully  capable  of  moving  the  business  to  be  done,  have 
been  paralleled  with  new  roads,  until  to-day  this  great  and  valuable 
investment  has  become  top-heavy,  unwieldy,  and  unmanageable  by  those 
who  are  appointed  to  that  trust,  and  thus  the  expected  result  of  excess- 
ive enterprise  in  railway  building  is  before  the  country.  While  we  fully 
recognize  that  the  managers  of  railways  are  among  our  brightest  and 
most  capable  business  men,1  we  believe  this  interest  has  assumed  such 
proportions  as  to  place  it  beyond  their  control,  and  therefore  beyond 
the  possibility  of  such  just  and  equitable  administration  of  its  affairs 
as  doubtless  animates  the  minds  of  these  managers.  Pools  are  now  no 
protection  to  stockholders  or  shippers.  Under  each  pooling  agreement 
of  the  past  year  or  more,  effected  by  a  desire  on  the  part  of  leading 
managers  to  preserve  the  property  from  loss,  and  the  public  from  un- 
certainty and  unfairness,  it  has  been  found  that  too  many  lines  are 
under  the  control  of  men  whose  agents  cannot  be  restrained  from  break- 
ing faith,  by  cutting  the  rates,  and  of  course  disrupting  the  agreement. 
If  managers  disapprove  of  these  irregularities  it  is  not  often  illustrated 
by  dismissal  of  the  agents.  Under  any  system  of  penalties  that  we  have 
lii-aid  of,  the  temptation  to  reduce  a  rate  of  freight  that  has  been  agreed 
upon  is  frequently  too  great  for  the  restraining  power  of  any  agent, 
from  the  chief  to  the  subordinate. 

FAST  FREIGHT  LINES. 

However  much  the  managers  of  railways  and  the  public  may  desire 
to  maintain  fair  and  uniform  rates  of  freight,  there  is  another  feature  in 
the  present  system  of  railways  which  seems  to  us  to  load  down  and 
cripple  their  attempts  in  that  line.  We  refer  to  the  great  number  of 
so-called  express  lines,  and  their  multiplied  agencies,  engaged  at  all 
leading  points  in  a  contest  for  the  same  freight  to  go  over  the  same 
trunk  line  of  road.  Independent  of  this  adverse  influence  on  freight 
rates  is  the  economic  consideration.  Each  of  these  organizations  is 
equipped  with  its  full  list  of  officers,  from  manager  to  the  subordinate 
agent,  scattered  over  the  West.  Of  course  this  great  additional  expense 


10  INTERSTATE    COMMERCE. 

must  be  charged  upon  the  freight  transported.  There  is  no  good  and 
valid  reason  why  more  than  one  agent  is  required  in  Toledo,  or  any 
other  leading  shipping  point,  for  engaging  freight  for  the  New  York 
Central,  the  Erie,  or  other  trunk  lines.  Of  course,  the  effect  of  increased 
competition  is  to  enhance  the  chances  of  a  broken  compact,  and  the 
probability  of  ascertaining  how  the  break  was  accomplished  diminishes 
in  the  ratio  of  the  number  engaged  in  it. 

LOW  RATES  ON  LONG  HAULS. 

But  the  most  conspicuous  and  oppressive  injustice  in  the  management 
of  railways  is  signalized  by  the  flexible  and  frequently  ruinous  rates  at 
which  the  products  of  the  country  are  transported  on  what  is  called  the 
long  haul  or  through  business,  from  points  like  Saint  Louis,  Kansas  City, 
and  west,  while  ftom  points  on  their  line  of  road  is  maintained  a  rate 
three  or  four  times  as  great.  We  will  content  ourselves  with  one  or 
two  examples.  Large  quantities  of  freight  have  been  transported  this 
winter  and  spring  from  Saint  Louis  to  New  York  at  15  cents  per 
100  pounds,  or  about  one-fourth  of  1  cent  per  mile,  while  the  local 
rates  on  one  of  the  lines  engaged  in  this  reckless  traffic,  say  from 
Illinois  to  Toledo,  average  20  cents  per  100  pounds.  It  is  well 
known  that  every  road  engaged  in  the  movement  of  the  products  of 
the  country  at  such  a  price  makes  an  actual  loss,  and  every  manager 
who  permits  it  is  guilty  of  a  flagrant  violation  of  his  obligation  to  the 
stock  or  bond  holders  of  his  road.  Whence  comes  the  right  to  the  exer- 
cise of  this  high-handed  arbitrary  power  ?  What  right  has  any  railway 
management  so  to  discriminate  against  his  own  stations,  and  the  value 
of  their  products,  and  the  trading  towns  that  have  grown  up  on  their 
line,  and  deflect  trade  from  its  natural  channels  ?  Most  of  these  traders 
desire  a  near-by  market  and  quicker  results  for  small  transactions,  and 
any  management  that  interposes  obstacles  to  that  freedom  of  choice,  in 
the  way  we  have  here  suggested,  is  a  usurper  of  power  never  delegated 
or  contemplated  in  the  chartered  franchises  of  his  road. 

•  LOCAL  DISCRIMINATIONS. 

The  Lake  Shore  Kailway  Company  have  a  local  tariff  from  Michigan 
and  Northern  Indiana  stations  to  Toledo  and  Detroit,  while,  from  the 
same  points,  on  commodities  going  east  of  Toledo  and  Detroit  the  rate 
charged  is  much  less  per  100  pounds.  In  illustration,  we  state  that 
from  a  large  number  of  stations  on  their  roads,  where  the  local  rate  on 
grain  to  Toledo  and  Detroit  is  10  cents  per  100  pounds,  it  is  4  cents  per 
100  pounds  to  those  cities  on  grain  going  east  of  them.  Such  instances 
are  simply  indications  of  the  drift  of  railway  management  in  the  West. 
These  unfair  and  aggressive  discriminations  are  the  true  index  to  the 
cause  of  the  natural  appeal  of  the  country  to  the  State  and  Congress 
for  measures  of  relief,  and  which  ought  not  to  be  disregarded. 

SOME  OF  THE  RESULTS  OF  POOLING. 

lu  the  foregoing  observations  we  have  apparently  deprecated  reduc- 
tions in  rates.  The  great  business  interests  of  this  country  are  conserved 
and  prospered  by  an  approximation  to  uniformity  in  the  cost  of  its  inter- 
nal and  national  commerce,  based  upon  fair  rates  and  fairly  adjusted. 
Frequent  and  violent  fluctuation  in  the  cost  of  transportation,  which 
enters  so  largely  into  the  cost  of  all  commodities,  is  in  the  last  degree 


INTERSTATE    COMMERCE.  71 

unequal  in  its  results,  unsettling  in  its  relation  to  values,  and  exasper- 
ating to  those  who  are  caught  by  a  sudden  change.  The  management 
of  the  railways  of  the  country,  by  pooling  on  a  fair  basis  ef  rates,  is 
doubtless  greatly  to  be  preferred  to  ruinous  and  destructive  manage- 
ment without  it.  The  interests  of  other  branches  of  trade  and  com- 
merce are  uot  to  be  promoted  by  destroying  or  rendering  profitless  the 
railway  investments  of  the  country,  and  the  prosperity  of  thousands 
who  are  not  railway  managers  would  be  touched  by  such  a  result;  but 
the  past  has  demonstrated  that  no  such  agreement  is  sufficient  to  re- 
strain the  great  diversity  of  interests  now  concerned  from  violations  of 
pledged  faith,  even  if  such  contracts  had  the  sanction  of  law.  Under 
frequent  agreements  for  pooling  in  the,  past  year  and  one-fourth,  let  us 
look  at  some  of  the  results  to  the  roads.  The  Railway  Age  says: 

"In  the  year  1884  thirty-seven  roads,  operating  11,000  miles  of  line, 
were  bankrupted  and  placed  in  receivers'  hands,  with  an  aggregate  of 
bonds  and  stock  of  $715,000,000.  In  the  first  quarter  of  the  present 
year  twenty  corporations  have  been  given  over  by  the  courts  to  re- 
ceivers, with  aggregate  bonds  and  .stock  of  $275,289,000.  The  aggre- 
gate is  about  $1,000,000,000  in  fifteen  months.  These  are  not  the  re- 
sults of  decreased  tonnage.  The  tonnage  carried  by  the  railways  from 
Chicago  during  the  first  quarter  of  this  year  exceeded  any  similar 
period  in  railroad  history.  The  loss  then  was  occasioned  by  a  contest 
and  rivalry  amongst  the  multiplicity  of  agents,  as  unnecessary  as  it 
was  destructive." 

The  Railroad  Gazette  says :  "  The  enormous  tonnage  transported  in 
March,  366,517  tons,  from  Chicago  eastward,  shows  a  capacity  for  trans- 
porting at  a  rate  of  4,400,0^0  tons  yearly,  while  the  largest  shipments 
ever  yet  made  in  any  entire  year  have  been  about  3,150,000  tons. 
Hence  it  appears  that  the  capacity  of  the  roads  is  at  all  events  full** 
1,250.000  tons  in  excess  of  the  business  done  in  any  year  thus  far.  Nor 
is  it  at  all  probable  that  the  roads  transported  to  their  full  capacity 
even  in  March  last.  It  will  require  years  of  growth  and  of  very  rapid 
development  in  the  business  of  the.  country  in  all  its  branches  to  supply 
a  sufficient  traffic  to  make  all  lines  profitable  which  are  now  in  opera- 
tion." 

THE  DUTY  OF  CONGRESS. 

Without  the  aid  of  pooling  contracts  the  tendency  is  so  to  depress 
rates  of  freight  and  travel  as  to  endanger  the  wrecking  of  the  whole 
system  of  railways,  and  in  our  judgment  the  time  has  arrived  when 
Congress  should  assume  its  undoubted  right  and  duty  to  the  whole 
country,  to  supervise  the  whole  system  of  transportation  in  this  coun- 
try. There  is  no  other  one  interest  directly  involving  such  enormous 
sums  of  money.  There  is  no  other  interest  of  such  consequent  results, 
by  good  or  maladministration,  upon  the  business  and  prosperity  of  the 
country,  whether  considered  in  relation  to  its  stock  or  bonds,  or  to  the 
general  welfare  of  the  whole  business  of  the  country.  This  plain  duty 
of  Congress  has  been  deferred  too  long  already,  antl  should  be  assumed 
without  delay. 

We  beg  to  state  to  your  committee  that  the  foregoing  observations 
are  free  from  animosity  to  the  great  railway  interest  of  the  country. 
The  interests  of  this  exchange  are  closely  interlocked  with  transporta- 
tion facilities,  but  we  sincerely  believe  that  an  equitable,  fair,  and  steady 
management  of  freight  rates,  which  all  interests  require  and  demand, 
cannot  be  expected  without  the  interposition  of  Congress  in  the  method 
we  shall  refer  to  in  our  reply  to  your  inquiries. 


72  INTERSTATE    COMMERCE. 

In  replying,  categorically,  to  your  several  inquiries,  we  have  to  say  : 

(1)  We  know  of  no  other  method  of  preventing  extortion  and  unjust 
discrimination  except  the  one  we  have  pointed  out,  viz,  Congressional 
control. 

(2)  The  rates  now  charged  on  all  through  business  from  the  West  to 
the  East  are  very  low,  while  the  local  rates  are  unchanged.    These  local 
rates,  from  all  points  in  Ohio,  Michigan,  Indiana,  Illinois,  &c.,  are  ad- 
justed on  a  basis  too  high,  when  compared  with  any  pool  rate  on 
through  business  established  within  the  past  year. 

PUBLICITY   OF  KATES. 

(3)  We  believe  publicity  of  rates  should  be  required  by  law  and  a 
change  prohibited  without  public  notice,  and  contracts  for  the  future 
absolutely  prohibited  under  any  circumstances.    Large  contracts  are 
ii-^uently  claimed  to  exist  between  railways  and  shippers,  when  rates 
are" Advanced,  under  which  shipments  continue  to  be  made  at  rates  fur- 
below what  is  charged  to  others.     A  significant  point,  well  worthy  of 
notice,  is  that  such  contracts  are  unknown  on  a  reduction  of  rates. 

(4)  A  system  of  rates  for  winter  should  form  the  basis  of  a  maximum,, 
and  from  April  15  to  November  15  a  minumum,  with  modifications  as  in* 
next  inquiry. 

(5)  The  element  of  value  of  agricultural  products  should,  in  our  judg- 
ment, have.a  bearing  on  rates  of  transportation.    There  is  a  degree  of 
fairness  in  the  principle  that  higher  values  justify  a  more  generous  rate- 
of  freight,  and  it  is  sanctioned  by  the  principle  of  participation  in  gen 
era!  prosperity ;  and,  on  the  other  hand,  depressed  values  dictate  a  pol 
icy  of  sharing  the  depression  with  the  producer. 

REBATES  AND  POOLING  CONTRACTS. 

(6)  We  can  imagine  no  conditions  or  circumstances  in  transporting 
the  products  of  the  country  that  would  justify  a  railway  company  to  pay 
a  rebate  from  a  uniform  price  of  freight  agreed  upon.    If  it  is  practiced 
on  a  lot  of  one  thousand  cars,  another  could  justly  claim  it  on  one  him 
dred  cars,  and  the  result  would  be  irregularity  and  unfairness  to  the 
greatest  number,  who  are  smaller  shippers. 

(7)  We  should  not  oppose  pooling  agreements,  the  result  of  which  was 
steady,  uniform,  and  fairly-adjusted  rates,  maintained  without  sudden 
breaks,  and  without  rebates,  as  an  alternative  to  uncertainty,  irregu- 
larity, and  ruinous  rates  without  pooling.    We  sincerely  deprecate  the 
loss  to  this  great  interest  which  the  present  competitive  contest  is  sure 
to  result  in.     Under  no  circumstances  can  a  pool  contract  be  justified 
(that  does  not  so  reach  and  touch  the  local  rates  on  the  different  lines 
.of  road  as 'to  make  an  approximate  correspondence  between  them  and 

the. rate  through.  But  our  impression  is  that  the  time  has  passed  for 
.expecting  any  further  permanent  agreement  by  pooling  on  actable  and 
fair  basis,  and  which  recognizes  the  principles  we  advocate  in  thus 
paper ;  and  any  agreement  that  ignores  them  is  but  a  continuation  of 
.oppressive  discrimination.  In  our  reply  to  interrogatory  No.  15  we 
indicate  a  fuller  reply  to  this  question. 

(8)  We  suppose  the  laws  of  our  country  give  to  every  shipper  the  right 
to  designate  the  route  of  his  consignment.     If  any  law  is  required  to  re- 
strain railways  from  otherwise  diverting  such  consignments  it  should 
be  passed. 

(9)  By  a  commission  appointed  for  that  purpose  by  the  Congress  qf 
the  United  States. 


INTERSTATE    COMMERCE.  73 

THE   EFFECT   OF  LOW    RATES  FOR  LONG   HAULS. 

(10)  Undoubtedly  railways  can  afford  to  transport  for  loug  distances 
at  a  less  rate  than  for  short  hauls.  But  what  is  a  long  distance  in  this 
connection  is  a  question  to  be  decided  by  an  intelligent  commission. 
Taking  Kansas  City  or  Minneapolis  as  a  base  there  is  no  reason  for  it 
lower  rate  per  mile  to  the  sea-board  than  to  the  lake  ports,  and  any  sys- 
tem that  proceeds  on. a  different  theory  cannot  be  defended.  A  power 
that  can  be  used  to  destroy  the  business  interests  of  one  city  to  enrich 
and  build  up  'another  is  simply  a  detestable  oligarchy,  which  ever\ 
American  citizen  desires  to,  but  as  no  power  to,  resist.  To  transport 
the  flour  of  Minneapolis  to  New  York  at  a  less  rate  than  from  Chicago,, 
or  points  nearer  the  sea-board,  is  to  use  the  combined  power  of  corpora- 
tions to  oppress  the  people  who  have  given  them  iheir  franchises,  and 
to  build  up  one  city  and  destroy  another.  These  great  transportation 
routes  were  not  created  for  such  purposes,  and  should  be  restrained 
from  exercising  such  power. 

WATER   ROUTES   AS   REGULATORS   OF   RATES. 

(14)  The  great  water  rentes  of  this  country,  which  are  being  improved 
yearly  by  the  General    Government,  and  on  which  transportation  is 
thereby  cheapened,  are  nature's  highway  for  the  great  agricultural 
r-ountry  West  and  Northwest.     It  has  been  heretofore,  and  must  con- 
tinue to  be,  the  great  regulator  of  rates  of  transport  of  the  heavy  com- 
modities   passing  east  and   west.     Without   this  potential  and  con- 
servative element  rates  of  freight  would  at  once  be  enhanced  and 
Western  values  depreciated.    By  a  free  water  navigation  of  1,000  miles 
grain  is  transported  at  0  cents  per  bushel,  a^d  against  that  no  railway 
can  compete.-    And  yet  there  is  no  antagonism  between  the  railways 
and  the  water.     The  grain  products  of  the  country,  lumber,  timber, 
staves,  and  coal,  seek  the  water  in  the  season  of  navigation,  while  flour, 
provisions,  live  stock,  and  the  great  and  growing  variety  of  other  prod- 
ucts seek  the  rail,  and  under  fair  rates  of  freight  the  railways  have 
prospered  during  that  period  as  highly  as  in  any  other.    The  necessity 
of  this  water  transportation  is  more  directly  realized  in  the  very  active, 
competition  that  now  exists  between  the  agriculturists  of  this  country 
and  those  of  India,  Australia,  Russia,  &c.     In  supplying  the  wants  of 
the  importing  states  of  the  Old  World  and  in  this  contest  every  one- 
fourth  of  a  cent  per  bushel  counts. 

A   COMMISSION   ADVOCATED. 

(15)  We  believe  the  only  good  and  reliable  method  of  regulating  inter- 
state commerce  in  this  country  is  by  the  establishment  of  a  transporta- 
tion or  railway  bureau,  with  a  commission  of  a  suitable  number  of 
competent  and  experienced  gentlemen,  with  power  to  regulate  and 
establish  systems  of  railway  rates  and  travel  throughout  the  country. 
Before  this  commission  complaints  should  be  made,  or  to  its  individual 
members,  and  these  commissioners  should  have  the  power  to  compel 
the  railways  to  deal  fairly  by  shippers.     No  individual  shipper  can  con- 
test a  case  with  a  railroad  company  without  being  confronted  with  a 
final  decision  in  the  United  States  court  at  Washington,  and  any  city 
or  trading  point  would,  of  course,  expect  the  same  delay  and  result. 
A  commission  to  hear  complaints  and  employ  the  power  of  the  Govern- 
ment to  prosecute  such  as  are  reasonable  is  the  salient  feature  to  be 
embodied  in  any  bill  for  the  protection  of  the  rights  of  shippers.    The 


74  INTERSTATE    COMMERCE. 

labor  of  adopting  a  just  system  of  rates,  as  before-  referred  to,  may  be 
less  difficult  than  it  seems.  The  various  pools  that  have  been  formed 
have  made  that  work  more  easy  of  accomplishment,  and  from  their  own 
voluntary  agreements  a  suitable,  fair,  and  doubtless  acceptable  basis 
can  be  ascertained.  Without  such  control,  and  without  such  a  basis, 
regulated  by  the  power  of  the  General  Goverement,  we  may  justly 
anticipate  the  bankruptcy  and  demoralization  of  the  great  railway  in- 
terests of  this  country. 


SIDNEY  D.  MAXWELL'S  STATEMENT. 

Statement  of  Sidney  I).  Maxicell,  superintendent  of  the  Cincinnati   Cham- 
ber of  Commerce. 

The  questions  touching  transportation  which  the  committee  have 
designated  for  answer  are  so  broad,  involve  so  many  interests,  and  rep- 
resent so  much  difference  of  opinion  among  men  equally  well  informed, 
that  I  am  not  disposed  to  Answer  them,  in  any  sense,  for  the  Cincinnati 
Chamber  of  Commerce.  Whatever  reply  I  may  make  will  be  the  ex- 
pression of  a  personal  opinion  and  nothing  more. 

As  to  the  propriety  of  corporations  engaged  in  interstate  commerce 
being  permitted  to  charge  a  lower  proportionate  rate  for  a  long  than  for 
a  short  haul,  it  seems  to  me  there  is  room  for  little  difference  of  opinion. 
The  charge  for  the  performance  of  any  work  should,  in  general,  be 
predicated  on  the  cost  of  the  service  performed,  and  inasmuch  as  the 
cost  to  the  railroad  company  for  a  long  haul  is  proportionately  less 
than  for  a  short  one,  the  conclusion  appears  inevitable  that  the  railroad 
company  should,  at  least  within  certain  limits,  be  permitted  to  charge 
a  less  proportionate  rate  for  the  former. 

Touching  the  importance  of  the  Government  maintaining  a  system 
of  water  routes  for  the  purpose  of  securing  cheap  transportation,  1 
believe  it  to  be  the  duty  of  the  Government  to  foster,  to  the  fullest  ex- 
tent, a  system  of  water  routes.  Without  entering  into  a  discussion  of 
the  particular  manner  in  which  it  is  to  be  secured,  I  may  add  that  there 
is  no  outlay  that  the  Government  may  make  on  the  Ohio  and  Missis- 
sippi Rivers  and  their  navigable  tributaries,  which  may  be  necessary 
to  maintain  their  present  usefulness  for  navigation,  or  to  improve  the 
same,  that  will  not  be  money  economically  expended.  While  by  combi- 
nations the  competitive  influence  of  water  routes  may  at  times  be  neu- 
tralized, they  can  never  be  permanently  destroyed,  and  must  always 
serve  as  a  wholesome  protection  against  railway  extortion. 

Relative  to  the  manner  in  which  legislation  for  the  regulation  of  in- 
terstate commerce  can  be  best  enforced,  it  occurs  to  me  that  it  will  be 
useless  to  legislate  unless  some  agency  be  specially  established  to  see 
that  the  laws  are  enforced  and  that  the  rights  of  corporations  and  in- 
dividuals are  alike  protected. 

As  to  the  matter  of  rebates  and  drawbacks,  pooling  contracts  and 
agreements  between  railroads,  &c.,  this  opens  such  a  wide  door  for 
consideration  that  I  hesitate  in  a  brief  reply  like  this  to  enter  upon 
their  discussion.  I  may  remark,  however,  in  general  terms,  that  there 
are  two  or  three  things  which  have  more  and  more  impressed  them- 
selves on  my  mind  in  connection  with  these  matters  touching  trans- 
portation. One  is  that,  in  the  midst  of  the  operation  of  all  these 
processes  to  which  you  allude,  we  have  witnessed,  if  not  a  steady,  a 


INTERSTATE    COMMERCE.  75 

general  reduction  in  the  cost  of  the  transportation  of  the  commodities 
of  the  country  where  the  observation  is  made  through  a  period  of  con- 
siderable duration.  This  is  so  much  the  case  that  it  seems  impossible 
to  imagine  what  could  be  done  with  the  surplus  products  of  the  coun- 
try at  present  if  we  were  compelled  to  rely  upon  the  rates  which  were 
charged  in  the  earlier  years  of  railroading.  Again,  in  the  period  em- 
braced  by  these  various  methods  devised  by  railroad  management,  the 
country  has  developed  with  surprising  rapidity  and  its  wealth  has  been 
immensely  increased.  Furthermore,  on  general  principles,  the  inter- 
ference by  legislationwith  the  perfect  fre  edom  of  movement  among  the 
various  agencies  employed  in  conducting  the  commercial  affairs  of  the 
country,  alike  with  individuals,  is  subject  to  the  constant  danger  of  in- 
flicting larger  injuries  than  it  relieves;  of  making  it  more  expensive  to 
transact  the  business  of  the  country  by  complicating  the  agencies  em- 
ployed for  its  performance,  and  by  opening  the  door  for  excesses  under 
the  cover  of  the  law  which  would  find  no  defense  in  the  absence  of  gov- 
ernmental interference.  I  do  not  lay  down  these  general  propositions 
as  reflecting  necessarily  my  opinion  in  regard  to  the  specific  inquiries  re- 
lating to  drawbacks,  pooling,  &c.,  named  in  your  circular,  but  as  indi- 
cating, in  a  measure,  the  breadth  of  the  questions  involved  and  the 
necessity  which  is  imposed  on  the  legislators  of  the  country  to  proceed 
with  caution  in  a  matter  where  interests  of  such  gravity  are  involved. 


PITTSBURGH  CHAMBER  OF  COMMERCE. 

Following  is  the  response  to  the  circular  of  the  committee  prepared 
by  the  Committee  on  Transportation  and  Railroads  of  the  Chamber  of 
Commerce  of  Pittsburgh,  Pa.,  and  adopted  as  expressing  the  views  of 
the  chamber : 

(1)  The  best  inetbo<l  of  preventing  the  practice  of  extortion  and  unjust  discrimina- 
tion by  corporations  engaged  in  interstate  commerce. 

The  best  method  of  preventing  such  practice  would  be  in  legislation 
on  the  subject,  to  provide  means  for  the  discovery  and  proof  of  extor- 
tion and  unjust  discrimination,  and  to  provide  adequate  penalties. 

(*2)  The  reasonableness  of  the  rates  now  charged  by  such  corporations  for  local  and 
through  traffic. 

No  rates  of  freight  can  be  considered  as  fixed,  but  rather  are  con- 
stantly changing.  The  so-called  "through  rates"  are  determined 
largely  by  competition  between  the  different  carrying  corporations,  and 
may  be  allowed  to  be  so  determined,  but  there  should  be  provision  iu 
the  legislation  whereby  the  so-called  local  charges  should  be  propor- 
tionately adjusted  to  the  through  rates. 

(3)  Whether  publicity  of  rates  should  be  required  by  law ;  whether  changes  of 
rates  without  public  notice  should  be  prohibited,  and  the  best  method  of  securing 
uniformity  and  stability  of  rates. 

Publication  of  rates  is  not  absolutely  necessary,  and  would  involve 
expensive  and  cumbrous  preparation  to  make  them  public,  but  rates 
should  be  always  accessible  to  interested  shippers. 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  interstate  commerce. 

It  is  not  necessary  to  establish  by  legislation  any  rates  for  transpor- 
tation. (See  answer  to  No.  2.) 


76  INTERSTATE    COMMERCE 

(5)  The  elements  of  cost,  the  conditions  of  business,  and  the  other  factors  that 
should  be  considered  ia  fixing  the  tariffs  on  interstate  traffic. 

In  view  of  the  second  and  fourth  questions  and  answers,  above  con- 
siderations are  unnecessary. 

(6)  Should  any  system  of  rebates  and  drawbacks  be  allowed  ?    If  so,  should  such 
transactions  be  regulated  by  law,  and  be  subject  to  official  inspection  or  approval? 
Or  should  they  be  entirely  prohibited  ? 

The  system  of  rebates  and  drawbacks  is  notoriously  associated  with 
uiijust  discrimination,  and  should  not  be  allowed  or  countenanced  by 
legislation,  and  should  be  positively  prohibited. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  dohjg  an  interstate 
business  be  permitted,  or  should  they  be  entirely  prohibited  by  law  ?    If  they  should 
be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agreements 
to  be  made  public  and  subject  to  official  approval  ? 

Such  contracts  and  agreements  should  be  positively  prohibited. 

(8)  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  select  the 
lines  and  parts  of  lines  over  which  their  shipments  shall  be  transported? 

Most  assuredly  shippers  should  have  the  right  to  select  any  one  of 
several  common  carriers. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  passen- 
gers and  freights  by  all  the  corporations  engaged  in  interstate  commerce  be  best  se 
cured  ? 

The  same  principle  applies  here  as  stated  in  second  answer,  viz,  the 
securing  of  fair  relations  between  charges  for  shorter  and  longer  dis- 
tances. 

(10)  Should  corporations  engaged  in  interstate  commerce  be  permitted  to  charge 
a  lower  proportionate  rate  for  a  long  than  for  a  short  haul  ?    Does  the  public  interest 
require  any  legislation  on  that  subject  ? 

This  question  opens  up  the  general  subject  of  long  and  short  hauls 
and  the  charges  therefor,  and  the  discussion  might  prove  too  extensive 
tor  an  ordinary  report ;  but  as  a  general  principle,  subject  to  certain 
limitations,  charges  should  be  proportionate  to  distance  and  the  public 
interest  would  be  subserved  by  appropriate  legislation. 

(11)  Should  any  concession  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  such  concessions  be  made  known  to  the  public? 

In  view  of  the  danger  to  the  public  consequent  upon  any  system  of 
concessions  which  may  be  liable  to  abuse,  it  would  be  better  possibly 
to  refuse  all  concessions,  but  the  one  suggested  seems  reasonable  and 
might  be  permitted,  if  strictly  guarded,  and  the  basis  of  such  concession 
should  be  made  known  to  the  public. 

(12)  Should  corporations  engaged  in  interstate  commerce  be  required  to  adopt  a 
uniform  system  of  accounts  ? 

The  Government  should  adopt  a  uniform  system,  including  similar 
reports  from  all  transportation  companies,  rather  than  require  the 
adoption  of  any  system  of  accounts. 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government  ?    If  so,  what  information  as  to  their  earnings,  expenses, 
and  operations  should  such  reports  contain  ? 

Yes,  or  oftener  than  annually,  as  the  experience  of  the  Government 
may  suggest — the  reports  bearing  upon  such  points  as  affect  the  gen- 
eral public — but  not  necessarily  the  details  of  earnings,  expenses,  &c., 
which  affect  their  stockholders  only. 


INTERSTATE   COMMENCE.  77 

(14)  In  makiug  provision  for  securing  cheap  transportation,  is  it  or  is  it  not  impor- 
tant that  the  Government  should  develope  and  maintain  a  system  of  water  routes  ? 

It  is  decidedly  important  that  the  Government  should. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  interstate  commerce  be 
best  enforced?    Should  a  commission  or  other  special  tribunal  be  established  tocarry 
out  the  provisions  of  any  law  Congress  may  enact  T 

There  should  be  established  a  special  interstate-commerce  bureau  iu 
connection  with  one  of  the  present  Departments  of  the  Government. 


FRANK  S.  BOND'S  STATEMENT. 

Statement  of  Frank  8.  Bond,  of  Cincinnati,  Ohio,  president  of  the  Cincin- 
nati, New  Orleans  and  Texas  Pacific  Railway  Company,  with  the  pro - 
risions  of  a  bill  proposed  by  him, 

In  response  to  interrogatories  of  the  committee,  communicated  by 
circular  dated  April  10,  1885,  I  beg  to  submit  the  following: 

ANSWERS   TO    THE    COMMITTEE'S  INTERROGATORIES. 

(1)  The  best  method  of  preveuting  the  practice  of  extortion  aud  un- 
just discrimination  by  corporations  engaged  in  interstate  commerce,  is 
by  bringing  all  such  corporations  under  the  common-carrier  laws  of  the 
United  States  and  enforcing  those  laws  through  the  Federal  courts ; 
such  enforcement  to  be  had  by  suit  in  name  of  the  United  States,  on 
complaint  of  any  person  injured,  to  be  brought  by  a  United  States  dis- 
trict attorney,  wheaever  an  injury  is  done  and  the  law  is  violated  by 
;iny  interstate  railway  company. 

(2)  The  rates  now  charged*  by  such  corporations  for  local  and  through 
traffic  are  subject  to  frequent  fluctuations;  at  times  they  are  unreason- 
ably high,  aud  then  again  as  unreasonably  low — below  actual  cost  of 
the  service.    Fluctuations  of  this  character  are  injurious  to  the  public, 
as  they  unsettle  values,  and  have  all  the  evil  effects  of  discrimination 
against  localities  and  individual  shippers.    Legislation  that  will  secure 
reasonable  and  uniform  rates  is  what  is  needed. 

(3)  I  think  publicity  of  rates  should  be  required  by  law,  but  the  carry- 
ing companies  should  not  be  prohibited  from  changing  such  rates  when 
necessary  to  meet  competition  via  water  routes,  or  from  any  other  proper 
cause,  without  other  public  notice  than  posting  such  changes  in  a  public 
place  iu  their  station  buildings.    I  believe  the  best  method  of  securing 
uniformity  and  stability  of  rates   will  be  by  Congressional  legislation 
that  will  make  the  common-carrier  laws,  and  their  enforcement  through 
the  Federal  courts,  applicable  to  interstate  traffic,  supplemented  by  cor- 
responding State  legislation  (which  will  naturally  follow),  applicable  to 
domestic  or  State  traffic ;  and  in  this  way  only  is  it  possible  to  secure 
uniformity  of  legislation  for  all  the  States. 

(4)  I  do  not  think  it  advisable  to  establish  a  system  of  maximum  and 
minimum  rates  on  interstate  commerce,  as  maximum  rates  are  hardly 
ever  charged,  and  minimum  rates  should  as  rarely  be  reached  under  a 
prudent  and  conservative  management.     Competition,  and  the  value  or 
worth  of  the  transportation  to  shippers,  will  sufficiently  regulate  rates 
it  violent  fluctuations  can  be  avoided. 

(5)  In  fixing  tariff  rates  for  interstate  traffic,  the  value  or  worth  of 


78  INTERSTATE    COMMERCE. 

the  transportation  to  the  shipper  and  the  conditions  of  business,  are  the 
principal  factors  that  should  be  considered.  The  cost,  or  assumed  cost, 
of  such  transportation  to  the  railroad  company  should  not  be  considered, 
for  it  must  necessarily  vary  materially  at  different  seasons  of  the  year, 
and  can  never  be  definitely  determined,  liable  as  it  is  to  fluctuations 
from  changes  in  the  volume  and  character  of  the  business  done,  from 
unusual  expenses  caused  by  accident  to  trains,  and  by  losses  from  flood, 
lire,  or  other  action  of  the  elements. 

(6)  liebates  and  drawbacks  are  not  necessarily  improper  in  them" 
selves,  and  they  should  not  be  restricted  other  than  by  the  common-law 
rule,  that  all  shippers  situated  alike  must  be  treated  alike.     To  prohibit 
them  by  law  would  be  a  restriction  upon  commerce  that,  in  my  opinion, 
would  result  in  injury  to  the  trade  and  commerce  of  the  country. 

(7)  Pooling  contracts  and  agreements  are  simply  a  federation  of 
roads,  or  systems  of  roads,  for  the  purpose  of  maintaining  reasonable 
and  uniform  rates,  and  avoiding  sudden  fluctuations  from  unreasonable 
competition.     They  answer  the  same  purpose  that  boards  of  trade  and 
chambers  of  commerce  do  among  merchants,  by  regulating  the  manner 
in  which  business  for  the  public  shall  be  done,  and  in  defining  and 
maintaining  the  rights  of  the  different  companies  in  respect  to  competi- 
tive'traffic.     There  is  no  necessity  for  regulating  such  organizations  by 
special  laws,  for  the  reason  that  it  is  impossible  to  keep  au$"  action  they 
may  take  from  being  publicly  known.     By  bringing  the  companies 
under  the  common-carrier  laws  of  the  country,  any  improper  use  or 
abuse  of  their  powers  under  such  a  federation  of  the  roads  will  be  effect- 
ually controlled,  as  the  enforcement  of  such  laws  through  the  Federal 
courts  on  complaint  of  parties  injured,  by  suits  brought  by  local  district 
attorneys  in  name  of  the  United  States,  will  amply  protect  the  public 
from  injury. 

(8)  I  do  not  think  any  special  law  necessary  for  securing  to  shippers 
the  right  to  select  the  lines  and  parts  of  lines  over  which  their  ship- 
ments shall  be  transported.     If  a  route  other  than  that  designated  is 
taken,  and  any  injury  results  to  the  shipper,  he  is  amply  protected  under 
the  common-carrier  laws.     He  has  a  right  to  demand  that  his  shipments 
shall  be  safely  and  promptly  transported  to  destination,  and  he  lias  hi* 
redress  under  tbe  bill  of  lading  in  all  cases  of  injury  from  violations  of 
his  contract. 

(9)  I  believe  the  best  and  only  practical  method  for  securing  a  uni- 
form system  of  rates  for  transportation  of  passengers  and  freight  is  by 
making  all  corporations  engaged  in  interstate  transportation,  subject 
to  the  common-carrier  laws  of  the  United  States,  and  by  providing  for 
the  prompt  enforcement  of  such  laws  through  the  Federal  courts,  on 
complaint  of  any  person  injured.     It  should  be  the  duty  of  the  United 
States  district  attorney  to  investigate  every  such  complaint,  and  it,  in 
his  opinion,  injustice  has  been  done  and  the  law  violated,  on  refusal  of 
the  company  to  correct  the  evil  he  should  at  once  commence  a  suit  in 
the  name  of  the  United  States  against  such  offending  corporation  for 
violation  of  the  law,  and  for  damages  to  the  party  injured — such  suits 
to  have  precedence  in  the  courts. 

(10)  Corporations  engaged  in  interstate   commerce  should,  in   my 
opinion,  be  permitted  to  charge  a  lower  proportionate  rate  for  a  long- 
haul  than  for  a  short  one.     Were  this  prevented  by  law  it  would  be 
impossible  to  move  the  agricultural  products  of  the  Western  and  West 
Mississippi  States  over  our  long  lines  of  railway  transportation  to  the 
Gulf  and  to  the  seaboard.     If  the  rate  for  the  short  haul  is  not  un- 
reasonable in  itself,  and  if  there  is  no  unjust  discrimination  against  a 


INTERSTATE    COMMERCE.  79 

locality  or  an  individual,  uo  injustice  is  done  by  such  a  difference  in 
the  rates.  In  cases  of  injustice,  or  where  injustice  is  claimed,  an  en- 
forcement of  the  common-carrier  laws  through  the  Federal  courts  will 
amply  protect  both  shippers  and  localities.  1  do  not  believe  that  any 
special  legislation  is  required  in  this  respect,  as  the  effect  of  such  legis 
lation  must  inevitably  act  as  a  restriction  upon  commerce. 

(11)  A  concession  in  rates  to  large  shippers  does  not  necessarily 
work  injustice  to  shippers  of  smaller  lots.     A  rigid  and  unvarying  rule 
would  work  injury  both  to  shippers,  to  localities,  and  to  transportation 
companies.     A  simple  enforcement  of  the  common-lair  rule,  that  all  who 
arc  situated  alike  must  be  treated  alike,  is  all  that  is  necessary  to  pro 
tect  the  public. 

(12)  I  think  railway  corporations  engaged  in  interstate  commerce 
should  be  required  to  adopt  a  uniform  system  of  accounts. 

(13)  I  believe  it  is  desirable  that  such  railway  corporations  should  be 
required  to  make  both  quarterly  and  annual  reports  to  the  Government, 
showing  in  detail  (on  blanks  of  uniform  character  to  be  furnished  by 
the  Government)  the  cost  of  the  road  and  current  charges  against  cap- 
ital, the  earnings,  expenses,  and  current  operations  of  each  separate 
corporate  property ;  these  reports  to  be  so  prepared  that  comparisons 
can  be  made.    This  would  be  of  great  value  to  the  Government,  to  the 
public,  and  to  all  owners  in  such  properties;  and  it  would  furnish  the 
best  practical  test  of  the  manner  in  which  the  different  properties  are 
handled  by  their  managers. 

(14)  I  do  not  think  it  necessary  that  the  Government  should  develop 
and  maintain  any  special  system  of  water  routes  for  securing  cheap 
transportation.     The  water  routes  now  in  existence,  reaching  as  they 
do  every  important  distributing  center,  are  ample  to  protect  the  public 
from  excessive  charges  by  the  railroad  companies. 

(15)  In  reply  to  your  interrogatory  as  to  the  manner  in  which  legis 
latiou  for  regulating  interstate  commerce  can  be  best  enforced — whether 
a  commission  or  other  special  tribunal  shall  be  established  to  carry  out 
the  provisions  of  any  law  that  Congress  may  enact — I  have  only  to  say 
that  1  do  not  think  a  commission  desirable  or  necessary,  as  1  do  not 
think  it  would  be  possible  for  auj*  commission  to  satisfactorily  accom- 
plish such  a  purpose  in  connection  with  the  120,552  miles  of  railway 
that  would  necessarily  be  subject  to  such  a  law. 

A  PLAN  OF  REGULATION  SUGGESTED. 

I  believe  the  best  and  only  practical  way  of  regulating  interstate 
commerce  is  by  bringing  all  interstate  railways  under  the  very  compre- 
hensive common-carrier  laws  of  the  country,  that  are  the  result  of  the 
wisdom  and  experience  of  centuries,  and  providing  for  the  enforcement 
of  such  laws  on  complaint  of  parties  injured,  by  suit  in  name  of  the 
United  States,  to  be  brought  by  the  local  district  attorneys  in  the  Fed- 
eral courts;  and,  in  order  that  prompt  redress  shall  be  had,  such  suits 
to  have  precedence  on  the  calendar.  As  all  railway  corporations  are 
creatures  of  State  or  Congressional  legislation,  I  think  it  a  duty  of  the 
Government  to  protect  the  public  from  all  abuse  of  their  powers,  free 
of  cost  to  the  parties  injured. 

For  the  purpose  of  more  fully  explaining  to  the  committee  the  char- 
acter of  legislation  required  under  such  a  plan  as  I  have  suggested,  the 
following  paper  on  "  interstate  commerce  and  its  regulation  by  Con- 
gress" is  submitted,  in  which  is  outlined  the  substance  of  a  bill  that, 
when  put  into  proper  shape  to  be  passed  by  Congress,  will,  1  believe, 


80  INTERSTATE    COMMERCE. 

furnish  a  basis  upon  wbicb  to  construct  a  comprehensive  system  of  in- 
telligent legislation  in. respect  to  the  railways  of  the  country  in  the 
interest  of  interstate  commerce — a  system  that  will  secure  uniformity 
of  legislation  in  all  tbe  States, -that  will  fully  protect  the  rights  of  the 
Government,  and  that  will  secure  prompt  redress  in  all  cases  of  injury 
or  injustice  to  individuals  or  localities  arising  from  abuse  of  corporate 
powers,  by  simply  availing  of  existing  laws  and  existing  tribunals  that, 
if  only  enforced  and  made  use  of,  are  ample  for  the  purpose. 

INTERSTATE   COMMERCE  AND  ITS  REGULATION  BY  CONGRESS. 

Beyond  all  question  the  transportation  of  freight,  or  of  the  subjects  of  commerce, 
for  the  purpose  of  exchange  or  sale,  is  a  constituent  of  commerce  itself.  This  has 
never  been  doubted,  and  probably  the  transportation  of  articles  of  trade  from  one 
State  to  another  \vas  the  prominent  idea  in  the  minds  of  the  framers  of  the  Consti- 
tution, when  to  Congress  was  committed  the  power  to  regulate  commerce  among  the 
several  States.  (Supreme  Court,  P.  &  R.  R.  R.,  vs.  Pennsylvania,  December  term, 
1872.  15  Wallace,  232.) 

There  is  an  almost  universal  feeling  throughout  the  country  that  rail- 
way corporations  and  transportation  lines  need  regulating;  that  the 
public  is  so  dependent  upon  them  for  its  transportation  that  any  mis- 
management or  abuse  of  their  corporate  powers  becomes  #  public  evil ; 
that,  as  all  such  properties  and  the  corporations  controlling  them  have 
been  created  by  and  derive  their  powers  from  the  Government,  it  is  a 
duty  of  the  Government  to  protect  the  public  from  extortionate  charges, 
unjust  discriminations,  and  unreasonable  exactions  of  every  kind  on  the 
part  of  such  companies.  The  owners  and  managers  of  railways,  the 
merchants,  manufacturers,  and  others  who  use  them,  and  the  law-makers 
who  are  responsible  for  their  existence,  while  admitting  that  something 
should  be  done,  are  neither  able  to  agree  among  themselves  nor  with 
each  other  as  to  the  character  of  legislation  required.  Some  favor  a 
commission  to  act  as  a  kind  of  advisory  board;  others  would  invest  a. 
commission  with  plenary  powers  to  investigate  and  determine  all  mat- 
ters of  difference  between  the  public  and  the  corporations ;  others,  like 
Mr.  Eeagan,  of  Texas,  would  enact  a  rigid  and  stringent  law  as  to  the 
rates  and  changes  in  rates  to  be  charged  for  the  different  classes  of 
traffic,  and  for  otherwise  controlling  by  an  inflexible  law  the  trade  and 
commerce  of  the  country  and  the  manner  in  which  the  business  and 
operation  of  railways. shall  be  carried  on;  others  do  not  think  any  leg- 
islation is  required,  but  that  competition  will  in  time  correct  all  evils, 
and  that  in  the  mean  time  matters  should  be  left  to  adjust  themselves. 

Any  legislation  in  the  direction  indicated  should  be  well  considered, 
as  it  must  affect  nearly  $7,500,000,000  of  capital  represented  by  120,552 
miles  of  railroad  that  produce  a  yearly  revenue  of  nearly  $824,000,000. 
As  this  enormous  interest  has  an  individual  ownership  and  pays  its  full 
proportion  of  State,  county,  and  municipal  taxes,  it  is  entitled  to  like 
protection  from  the  Government  as  other  property  owned  by  citizens 
in  the  several  States.  All  attempts  at  legislation  by  Congress  seem  to- 
have  been  in  the  direction  of  controlling  the  railways,  instead  of  regu- 
lating them  as  authorized  by  the  Constitution.  It  is  possible  to  regu- 
late the  waters  of  the  Mississippi  Eiver  by  a  proper  system  of  jetties, 
levees,  dikes,  and  revetment  works,  and  a  vast  amount  of  good  can  be 
done  by  keeping  its  waters  in  natural  channels ;  but  an  attempt  in  any 
other  way  to  control  the  force  of  the  current  or  the  volume  of  water 
seeking  the  Gulf  must  result  in  signal  failure.  It  is  equally  impracti- 
ble  for  Congress  to  control  the  trade  and  commerce  of  the  country  by 
rigid  and  arbitrary  laws  designed  to  obstruct  or  limit  the  free  and  uu- 


INTERSTATE    COMMERCE.  81 

restricted  use  of  one  «tf  the  most  important  constituents  of  commerce, 
the  120,552  miles  of  transportation  lines  that  cover  our  broad  extent 
of  territory,  reaching  from  the  Atlantic  Ocean  to  the  Pacific,  and  from 
Canada  to  the  Gulf  of  Mexico. 

The  existing  laws  relating  to  common  carriers  embody  the  wisdom 
and  experience  of  many  generations.  They  have  been  but  little 
changed  in  many  years,  only  to  such  extent  as  has  been  found  neces- 
sary to  adapt  them  to  our  later  civilization,  and  they  are  based  upon 
a  recognized  principle  of  justice,  applicable  alike  to  localities  and  to 
individual  shippers,  that  all  who  are  situated  alike  must  be  treated  alike. 
The  simple  enforcement  of  these  laws  through  the  Federal  courts  will, 
it  is  believed,  amply  protect  every  citizen  and  every  locality  from  unjust 
discriminations  and  unreasonable  exactions  of  every  kind  on  the  part 
of  railway  companies  and  transportation  lines,  and  but  little  legisla 
tion  is  needed  to  bring  all  such  corporations  subject  to  these  laws  to 
the  fullest  extent. 

PROVISIONS  OF   THE   PROPOSED   LAW. 

It  is  only  necessary  for  Congress  to  pass  "  an  act  regulating  com- 
merce with  foreign  nations,  among  the  several  States,  and  with  the  In- 
dian tribes."  The  essential  provisions  of  such  a  law  would  be  to  enact 
and  declare — 

(1)  That  "  interstate  commerce  "  is  the  commerce,  trade,  or  traffic,  that  originating 
in  one  State  or  Territory  is  carried  therefrom  into,  or  through,  one  or  more  other 
States  or  Territories.     That  "  State  commerce"  is  the  domestic  trade,  or  traffic,  that 
originating  in  any  one  State  or  Territory  is  confined  within  the  territorial  limits  of 
the  same  State  or  Territory. 

(2)  That  all  lines  of  railway,  including  boats,  bridges,  and  ferries,  operated  in 
connection  therewith,  that  are  open  to  interstate  business,  or  over  which  interstate 
traffic  shall  pass,  are  interstate  railway  lines ;  that  they  shall  be  open   highways, 
military  and  post-roads,  and  common  carrier  lines ;  and  that  they  shall,  together 
with  all  corporations,  associations,  and  individuals  owning,  controlling,  or  operating 
the  same,  be  subject  to  the  provisions  of  this  act,  and  of  all  acts  relating  to  high- 
ways, post-roads,  and  common  carriers. 

(8)  That  all  interstate  traffic  shall  be  shipped  and  forwarded  to  destination  without 
unreasonable  delay,  and  as  nearly  as  practicable  in  the  order  of  its  delivery  to  the 
proper  agent  of  the  transportation  company.  That  the  president,  directors,  and  other 
officers  of  every  corporation  or  other  organization  owning,  controlling,  or  operating 
an  interstate  railway  line,  and  all  managers,  superintendents,  agents,  enginemen, 
trainmen,  and  other  employe's  on  such  lines,  shall,  so  far  as  their  duty  and  power  lies, 
be  responsible  personally  and  officially  for  the  prompt  shipment  of  traffic  ottered,  that 
the  rates  charged  are  just  and  equitable,  for  the  prompt  movement  of  trains  carrying 
interstate  traffic,  or  the  United  States  mails,  and  for  the  protection  and  safe  delivery 
at  destination  of  all  such  trains  and  property  in  their  charge  or  keeping  ;  and  any 
person  or  persons  who  shall  willfully  obstruct  or  delay  the  movements  of  such  trains, 
or  if  an  officer,  agent,  trainman,  or  other  employ6in  charge  he  shall  desert  such  train 
e.n  route,  or  refuse  to  take  it  through  to  its  destination,  he  or  they  shall  be  guilty  of  a 
misdemeanor,  and,  on  conviction,  shall  be  subject  to  the  penalties  therefor,  and  in 
addition  shall  be  liable  for  both  actual  and  exemplary  damages. 

(4)  That  fair  and  reasonable  rates  shall  be  established  for  the  transportation  of 
interstate  passengers  and  freight  over  such  lines,  and  through  tickets  and  bills  of 
lading  may  be  issued  to  cover  such  business;  and  joint  through  tariffs  shall  be  pub- 
lished for  the  information  of  shippers  and  other  parties  interested  ;  but  such  through 
rates  shall  not  exceed-  the  sum  of  the  local  rates  charged  by  the  several  companies 
for  a  like  haul  of  State  or  domestic  traffic  ou  their  several  lines.     That  extortionate 
charges,  and  unjust  and  unreasonable  discriminations,  by  rebate  or  otherwise,  against 
localities  or  individuals,  are  absolutely  prohibited;  and  what  shall  constitute  an 
extortionate  charge,  or  unjust  or  unreasonable  discrimination,  shall  be  determined 
after  hearing  by  any  United  States  district  or  circuit  court  having  jurisdiction,  as 
hereinafter  provided. 

(5)  That  if  any  such  interstate  railway  corporation  or  organization  shall  make 
extortionate  charges  for  the  transportation  of  interstate  traffic,  or  if  it  shall  make 
unreasonable  or  unjust  discriminations  against  individuals  or  localities,  the  party  or 

16232  AP 6 


82  INTERSTATE   COMMERCE. 

parties  aggrieved  may  file  a  statement  of  snch  grievance  with  a  United  States  district 
attorney,  who  shall  investigate  the  case;  and  if,  in  his  opinion,  there  is  reasonable 
ground  for  complaint  that  injustice  has  been  done,  and  that  the  law  has  been  vio- 
lated ;  and  if  the  company  shall  en  his  request  or  demand  refuse  to  make  proper 
reparation,  it  shall  be  his  duty  to  bring  a  suit  in  name  of  the  United  States  against 
such  offending  company,  such  suit  to  be  brought  in  the  district  or  circuit  court  of  the 
United  States  having  jurisdiction,  for  violation  of  the  provisions  of  this  act,  and  for 
damages  to  the  party  or  parties  injured,  and  such  suits  shall  have  precedence  on  the 
calendar. 

.(6)  That  in  case  the  managers  of  any  two  or  more  interstate  railway  lines  shall  fail 
to  agree  as  to  a  connection  of  their  roads  for  interchange  of  business,  or  on  proper 
traffic  rates  to  or  from  competitive  points  or  competitive  territory;  or  if -from  any 
cause  a  cut  or  unreasonable  reduction  of  rates  shall  be  made  so  much  below  the  gen- 
eral average  of  traffic  charges  on  similar  lines  as  to  be  manifestly  below  cost  or  service, 
on  complaint  filed  with  the  district  attorney,  accompanied  by  a  sworn  statement  of 
facts  made  by -the  president  or  vice-president  or  by  any  two  directors  of  a  corporat  ion 
unfavorably  affected  by  such  disagreement  or  reduction,  or  on  like  complaint  with 
like  statement  of  facts  made  by  shareholders  holding  five  thousand  or  more  shares  in 
any  such  company  or  companies,  or  on  like  complaint  by  any  party  claiming  to  bo 
injured  by  such  unreasonable  reduction  in  rates,  suit  shall  at  ouce  be  brought  in  the 
name  of  the  United  States  against  such  company  or  companies;  and  on  application 
of  the  prosecuting  officer  the  judge  of  any  United  States  district  or  circuit  court  hav- 
ing jurisdiction,  or  any  justice  of  the  Supreme  Court  of  the  United  States,  shall  ap- 
point three  disinterested  persons  to  act  as  a  special  board  of  commissioners,  one  of 
whom  shall  be  a  civil  engineer  familiar  with  railway  construction,  one  with  experi- 
ence in  the  operative  management  of  railways,  and  one  with  a  knowledge  of  traffic 
management  and  rates.  Such  special  board  of  commissioners  may  hold  meetings  when 
and  where  they  please ;  they  shall  keep  a  record  of  their  proceedings,  and  shall  be  vested 
.with  power  to  send  for  persons  and  papers,  and  to  examine  under  oath  all  persons  hav- 
ing knowledge  of  the  matters  to  be  investigated.  After  a  full  investigation  and  hearing 
of  all  interested  parties  desiring  to  be  heard,  the  board  shall  prepare  a  report  in  writing, 
setting  forth  the  facts  in  the  case,  with  suggestions  and  recommendatiori&as  to  what 
should  be  done  in  the  interest  of  the  public  and  of  the  parties  interested,  to  adjust 
the  differences.  This  report,  with  the  record  of  evidence  taken,  shall  then  be  pre- 
sented to  the  court,  notice  being  first  given  to  the  proper  officers  of  the  disagreeing 
lines  to  be  present  by  counsel  or  otherwise.  The  report  will  then  be  read,  and  snch 
arguments  and  statements  as  parties  in  interest  shall  desire  to  make  shall  then  be 
heard,  after  which  an  order  or  decree  of  the  court  shall  be  made  in  respect  to  the 
matters  in  dispute,  that  shall  be  final  and  binding  on  the  several  railways  and  trans- 
portation lines,  and  other  parties  interested. 

(7)  That  there  shall  be  established  in  the  Interior  Department  an  ''interstate 
transportation  bureau,"  to  be  in  charge  of  a  "  chief  commissioner^"  who  shall  be  ap- 
pointed by  the  Secretary  of  the  Interior,  and  responsible  directly  to  him,  with  such 
clerical  and  ather  assistants  as  may  be  required ;  and  all  original  records  and  returns 
relating  to  interstate  commerce  and  transportation  shall  be  in  charge  of  such  bureau  : 
and  it  shall  be  the  duty  of  the  chief  commissioner,  under  instructions  of  the  Secretary 
of  the  Interior,  to  see  that  the  provisions  and  requirements  of  this  act,  and  of  all  acts 
amendatory  of  and  supplementary  hereto,  are  strictly  complied  with,  and  carried 
into  practical  effect.     And  the  said  chief  commissioner,  or  any  other  persou  desig- 
nated bv  the  Secretary  of  the  Interior,  shall  have  authority  at  any  time  to  examine 
the  books,  records,  and  vouchers  of  any  interstate  railroad  corporation  or  transpor- 
tation line,  and  to  take  extracts  and  copies  therefrom  ;  and  may  examine  under  oath 
the  officers,  agents,  servants,  and  employe's  of  such  corporation,  or  any  other  person  or 
persons,  in  respect  to  any  of  the  rights,  powers,  and  duties  of  such  corporation,  or  as  to 
any  other  matters  necessary  or  proper  to  be  known  for  the  due  regulation  of  interstate 
commerce;  and  it  shall  be  the  duty  of  the  Secretary  of  the  Interior  to  recommend,  from 
time  to  time,  such  additional  legislation  as  may  be  necessary  to  establish  and  perfect. 
a  just  and  practical  system  of  national  legislation  regulating  interstate  commerce  and 
transportation.     All  necessary  and  proper  expenditures  of  the  Interior  Department 
in  organizing  and  maintaining  such  bureau,  including  salary  of  chief  commissioner, 
clerks,  and  assistants,  and  all  other  properly  authorized  expenditures  under  the  pro- 
visions of  this  act,  shall  be  kept  separate  and  distinct  from  other  expenditures  of  the 
Interior  Department,  and  the  aggregate  amount  when  ascertained  for  each  calendar 
year  shall  be  assessed  upon  and  collected  from  vhe  interstate  railway  Hues  pro  rata, 
according  to  the  actual  mileage  of  each  company  open  to  interstate  traffic. 

(8)  That  every  corporation  or  other  organization  created  by  or  organized  under  a 
general  or  special  law  of  Congress,  or  of  any  State  or  Territory  of  the  United  States, 
that  shall  own,  control,  or  operate  any  such  interstate  railway  line,  or  lines  of  trans- 
portation, or  any  part  or  division  of  snch  a  line,  shall  within  three  months  from  the 
passage  of  this  act  file  with  the  Secretary  of  the  Interior  of  the  United  States  copies  of 


INTERSTATE    COMMERCE.  83 

all  its  charter  papers  and  papers  relating  to  its  organization  and  powers;  such  copies 
to  be  verified  by  tbe  president  and  secretary  of  the  company,  under  seal,  and  if 
copies  of  a  State  or  Territorial  act,  or  of  articles  of  association  or  consolidation  filed 
thereunder,  to  be  also  certified  by  the  proper  State  or  Territorial  officer  under  his  official 
seal.  They  shall  also  file  verified  copies  of  all  leases,  contracts,  or  agreements  by 
which  the  property  and  rights  of  any  other  corporation  or  association  have  beeii 
acquired,  or  are  controlled  or  operated.  They  shall  also  file  copies  of  all  yearly  re- 
ports heretofore  and  hereafter  made  by  the  president,  directors,  and  officers  of  the 
company,  together  with  a  statement  verified  by  the  president  and  secretary  (on  blanks 
to  be  furnished  by  the  Secretary  of  the  Interior)  showing  the  capital  stock  of  the 
company,  the  amount  and  character  of  its  indebtedness  and  liabilities,  with  copies  of 
its  mortgage  aii>l  guaranty  obligations,  the  receipts  of  the  company  from  interstate 
business  and  from  other  sources,  and  its  expenditures  of  all  kinds  during  the  calendar 
year,  together  with  such  other  reports  and  information  as  shall  be  called  for  from 
time  to  time  by  the  Secretary  of  the  Interior;  and  similar  yearly  statements  shall 
be  made  currently  as  required  by  the  Secretary  of  the  Interior,  showing  the  condi- 
tion aiid  operations  of  the  company  for  each  calendar  year  thereafter. 

(9)  That  every  such  interstate  railway  corporatioji,  or  other  organization,  shall  file 
with  the  Secretary  of  the  Interior  (on  blanks  to  be  furnished  by  him)  current  quar- 
terly statements,  verified  by  the  president  and  secretary  of  the  company,  showing  ita 
interstates  and  other  tonnage  transported,  its  gross  receipts  from  interstate  traffic  of 
every  kind,  and  from  other  sources,  its  working  expenses,  its  fixed  charges  for  in- 
terest, rentals,  &c.,  and  its  current  expenditures  charged  to  construction,  reconstruc- 
tion,  betterment,  and  improvement   accounts;  such   statements  fc>   be  made  up  to 
March  31,  June  30,  September  30,  and  December  31  of  each  year,  and  to  be  filed  within 
five  weeks  from  the  end  of  each  quarter  respectively. 

(10)  That  if  any  such  interstate  railway  corporation  or  organization  shall  refuse  or 
neglect  to  make  the  returns  required  by  the  Secretary  of  the  Interior,  or  shall  in  any 
other  way  fail  to  comply  with  the  provisions  of  this  act,  or  of  any  decree  or  order  of 
court  issued  hereunder,  the  Secretary  of  the  Interior  may  suspend  or  revoke  the  per- 
mission and  rights  granted  by  this  act,  and  under  the  act  of  June  lf>,  1866,  for  such  com- 
pany to*  curfy  interstate  traffic  on  its  lines,  and  to  receive  compensation  therefor,  in- 
cluding the  right  to  have  such  business  covered  by  through  tickets  and  .bills  of  lad- 
ing ;  and  he  may  also  revoke  the  permission  herein  and  heretofore  granted  for  such 
company  to  connect  its  road. with  roads  in  other  States  for  the  purpose  of  forming 
continuous  lines  of  transportation ;  and   such   company  shall  also  be  subject  to   a 
penalty  of  §1,000  fine,  and  $100  per  day,  additional,  as  a  fine  for  each  day's  refusal  or 
neglect  of  such  requirements,  to  be  recovered  in  an  action  at  law,  instituted  in  the 
name  of  the  United  States,  in  any  court  of  competent  jurisdiction.     In  case  any  com- 
pany shall  remain  in  such  default  for  more  than  twenty  days  after  notice  from  the 
Secretary  <>i'  the  Interior,  it  shall  be  the  duty  of  the  Attorney-General  to  take  legal 
proceedings  to  enforce  a  compliance  with  the  provisions  of  and  penalties  incurred 
under  this  act,  by  mandamus,  injunction,  or  otherwise,  and  any  judge  of  a  United 
States  district  or  circuit  court,  having  jurisdiction,  or  any  justice  of  *he  Supreme 
Court  of  the  United  States  shall  give  precedence  to  such  suits  and  applications. 

THE   THEORY   OF   THE  BILL. 

It  will  be  noticed  that  the  theory  of  the  bill  is  to  clearly  define  what 
is  interstate  commerce  and  what  railways  and  transportation  lines  are 
brought  under  the  provisions  of  tbe  act ;  to  provide  for  the  prompt 
shipment  of  such  traffic,  and  for  its  protection  through  to  destination; 
to  secure  fair  and  reasonable  rates  for  transportation  and  to  prevent 
extortionate  charges  and  unjust  discrimination ;  to  provide  prompt  re- 
dress through  the  United  States  courts  to  parties  injured  from  viola- 
tions of  the  law,  without  cost  to  the  parties  so  injured.  It  also  provides 
a  practical  and  expeditious  method  of  settling  the  differences  between 
railroad  corporations,  whenever  such  differences  affect  public  or  private 
interests.  The  act  further  provides  for  the  establishment  of  an  u  interstate 
transportation  bureau,"  where  verified  copies  of  all  charter  papers,  in- 
cluding leases,  contracts,  and  agreements,  shall  be  filed  for  information 
of  the  Government  and  of  the  public;  and  it  will  also  secure  to  the 
Government  full  reports  and  statements  as  to  the  volume  and  character 
of  interstate  business,  and  incidentally,  to  shareholders  and  others  in- 
terested in  railroad  corporations,  uniform  quarterly  and  yearly  reports. 


84  INTERSTATE   COMMERCE. 

i 

showing  the  financial  condition  and  current  operations  of  such  com- 
panies, so  that  comparisons  can  be  made. 

The  act  is  based  on  the  theory  that  while  railway  companies  are 
private  corporations,  their  special  powers  and  privileges  are  derived 
from  State  and  Congressional  legislation;  consequently  any  misuse  or 
abuse  of  their  powers  is  a  public  offense  or  misdemeanor  against  which 
it  is  the  duty  of  the  Government  to  protect  the  public  without  cost  to 
the  individual  injured.  The  bill,  therefore,  provides  that  complaints 
against  such  carrying  companies  may  be  lodged  with  a  United  States 
district  attorney,  and  it  is  made  his  duty  to  investigate  them,  and  when 
in  his  opinion  injustice  has  been  done  and  the  law  violated  suit  must 
be  brought  at  once  in  name  of  the  United  States  against  such  offending 
companies,  such  suits  to  have  precedence  in  the  courts.  In  suits  of 
such  a  character,  involving  as  they  necessarily  must  the  private  rights 
of  individuals  claiming  actual  and  exemplary  damages,  no  company 
with  an  intelligent  management  will  ever  stand  a  trial  that  can  be 
avoided  by  reasonable  concessions,  without  great  confidence  in  the  jus- 
tice of  its  defense.  It  is  believed  that  the  effect  of  such  legislation  will 
be  to  make  all  parties  more  anxious  to  settle  their  differences  out  of 
court;  and  the  provision  for  a  special  board  of  commissioners  to  exam- 
ine and  report  facts  and  suggestions  to  the  court  in  cases  of  disagree- 
ment among  corporations  that  injuriously  affect  the  public  interests 
will,  it  is  believed,  force  railway  managers  to  settle  their  company  dif- 
ferences without  indulging  in  a  "  war  of  rates  "  that  is  certain  to  inflict 
great  injury  upon  the  corporate  properties  in  their  charge,  a,nd  by  un- 
settling values  is  equally  certain  to  injuriously  affect  the  trade  ami  traf- 
fic of  the  country  tributary  to  their  own  and  all  connecting  railway 
lines. 

The  plan  of  using  local  district  attorneys  as  agents  to  adjust  through 
the  Federal  courts  local  complaints  against  carrying  companies  will, 
it  is  believed,  secure  a  more  prompt  adjustment  of  such  differences  than 
can  be  obtained  in  any  other  way  ;  and  the  record  of  such  cases  in  the 
various  offices  of  the  United  States  district  attorneys  throughout  the 
country,  transcripts  of  which  should  be  filed  currently  in  the  Interior 
Department,  or  can  be  called  for  by  the  Attorney-General  at  any  time, 
will  enable  the  Government  to  obtain,  whenever  desired,  the  most  full 
and  complete  information  from  all  sections  of  the  country  in  respect  to 
complaints  and  differences  between  the  public  and  the  carrying  compa- 
nies, from  which  to  formulate  such  supplemental  legislation  as  experi- 
ence shall  determine  to  be  necessary,  to  complete  and  perfect  a  national 
system  of  supervision  over  interstate  railways,  in  the  interests  of  inter- 
state commerce,  and  of  commercial  intercourse  between  the  several 
States  and  Territories,  and  with  foreign  nations. 


GEORGE  B.  WEIGHT'S  STATEMENT. 

Statement  by  General  George  B.  Wright,  of  Indianapolis,  Indiana,  former 
Railroad  Commissioner  of  Ohio. 

In  looking  over  your  inquiries,  I  find  them  so  numerous  and  coinpre 
hensive  I  feel  some  hesitancy  in  attempting  a  reply,  but  feeling  a  deep 
interest  in  the  subject,  and  believing  that  you  are  anxious  to  obtain 
information  from  all  sources  to  aid  your  committee  in  determining  as 


INTERSTATE    COMMERCE.  85 

far  as  possible  what  could  and  what  could  not  be  done  by  Congress  m 
solving  the  most  difficult  problem  of  the  age — 

How  shall  the  transportation  of  inter-State  commerce  be  so  controlled  and  regu- 
lated as  to  best  subserve  the  interests  of  the  companies  engaged  in  it  and  the  people 
dependent  upon  it  without  injury  or  injustice  to  either? 

So  understanding  the  purpose  and  aim  of  your  committee,  I  have 
taken  up  your  inquiries  in  the  order  presented,  and  will  make  my  com- 
ments upon  them  with  a  sincere  desire  to  throw  what  light  I  can  upon 
the  subject,  but  with  full  consciousness  of  my  utter  inability  to  offer  a 
safe  and  sure  cure  for  all  the  evils  and  difficulties  attending  the  subject. 
I  begin  with  your  first  question. 

(1)  The  best  method  of  preventing  the  practice  of  exportation  and  unjust  discrimi- 
uation.by  corporations  engaged  in  inter-State  commerce. 

While  each  of  your  questions  involves  abundant  range  for  comment, 
1  will  endeavor  to  confine  myself  as  briefly  as  possible  to  the  points 
raised  by  each  inquiry.  While  they  are  varied  in  phraseology,  there 
are  several  so  nearly  alike  I  fear  I  may  be  led  into  some  repetition,  which 
I  hope  you  will  excuse.  In  regard  to  this  first  inquiry,  I  will  be  very 
brief,  and,  as  far  as  possible,  will  endeavor  to  be  so  in  reply  to  the  whole 
fifteen.  "Extortion  and  unjust  discrimination"  will  seldom  be  found 
in  rates  where  abundant  competition  exists,  either  by  water  or  rail. 
They  may  exist  where  a  short  line  is  dependent  upon  some  great  through 
line  for  its  outlet  or  inlet  of  through  traffic,  when  arbitrary  rates  are 
forced  upon  them  by  the  stronger  line.  You  may  find  a  few  instances 
of  this  kind  in  your  investigations  ;  but  I  think  they  will  be  rare,  and 
that  you  will  find  the  contrary  to  be  the  general  rule — that  a  large  pro- 
portion of  the  transportation  companies  are  carrying  both  through  and 
local  traffic  too  low  to  enable  them  to  maintain  their  property  and  de- 
rive a  reasonable  revenue  for  its  cost.  If  cases  of  "  extortion  and  unjust 
discrimination"  are  found,  I  think  they  might  be  prevented  by  a  com- 
pact or  agreement  between  all  the  lines  interested  in  or  affected  by  the 
through  traffic,  and  the  compact  or  agreement  legalized  and  enforced 
by  soine  official  authority. 

(2)  The  reasonableness  of  the  rates   now  charged  by  such  corporations  for  local 
and  through  traffic. 

Maximum  rates  for  local  traffic  are  almost  always  fixed  by  the  States 
granting  the  charters  to  the  companies,  and  cannot  be  controlled  by 
Congress.  The  maximum  rates  allowed  are  rarely  ever  charged;  on 
the  contrary,  they  are  almost  always  far  below  the  maximum  allowed, 
especially  were  competition  exists.  The  country  is  now  so  abundantly 
su-pplied  with  rail  and  water  transportation  that  competition  will  gen 
erally  prevent  extortion  in  rates,  and  where  this  is  not  the  case  as  to  local 
rates  the  States  alone  have  power  to  deal  with  them.  As  to  through 
traffic,  the  rates  cannot  be  called  unreasonable.  For  most  of  the  coun- 
try they  are  the  lowest  of  any  country  in  the  world,  and  lower  than 
most  of  the  companies  can  afford  with  their  present  fixed  charges. 
There  are  numerous  instances  where  the  through  rates  are  below  the 
actual  cost  of  transportation,  and  I  know  of  no  through  rates  that  are 
exorbitant  compared  with  the  length  of  haul  and  other  expenses  of 
service.  This  traffic  is  also  regulated  and  controlled  against  extortion 
in  almost  every  locality  by  competition  and  the  laws  of  trade  and  sup- 
ply and  demand, 


86  INTERSTATE    COMMERCE.    '. 

• 

(ii)  Whether  publicity  of  rates  sbooM  be  requited  by  law:  whether  changes  of 
rates  withoift  public  notice  should  be  prohibited,  and  the  best  "method  of  securing 
uniformity  and  stability  of  rates. 

THE   PUBLICATION   OF   UAThlS. 

Nearly  all  companies  publish  a  general  tariff  of. rates.  &uch  publi 
cations  are  sometimes  on  small  cards  ;  in  other  cases  on  large  cards  or 
in  volumes  of  many  pages.  These  schedules  are  mostly  lor  their  own 
convenience  and  guidance  and  for  the  use  of  their  own  agents.  They 
are  hardly  ever  consulted  by  the  public.  The  shipper  consults  the 
agent  at  the  station,  and  the  agent,  if  not  familiar  with  the  rates,  con 
suits  the  schedule.  There  should  be  published  a  general  schedule  of 
rates,  fixed  upon  a  just  and  fair  basis,  considering,  us  far  as  possible, 
all  the  elements  involved  in  cost  of  service,  length  of  haul,  competition, 
value  of  article  shipped,  supply  and  demand,  and  the  many  other  con- 
tingencies influencing  rates.  These  rates,  both  for  passengers  ;iml 
freight,  should  be  published,  or  printed  and  kept,  subject  to  inspection 
by  any  and  all  shippers  and  passengers,  or  proper  authorities,  when 
called  for.  But  to  publish  and  post  up  at  every  railroad  or  water  sta 
tion  in  the  country  passenger  and  Ireight  rates  on  every  article  of 
transportation  to  and  from  every  railroad,  canal,  and  navigable  water 
station,  and  to  every  terminal  point  of  through  traffic,  would  be  a  great 
expense ;  and  to  publish  every  change  in  them  would  be  a  large  ad- 
ditional expense,  and,  in  my  judgment,  of  little  value  to  the  general 
public. 

As  to  the  best  method  of  securing  "  uniformity  and  stability  of  rates," 
no  uniform  rule  can,  in  my  judgment,  be  adopted.  The  many  compli- 
cations and  difficulties  involved  in  regulating  rates  applies  equally  to 
the  method  of  securing  "uniformity  and  stability."  It  cannot  be  done 
for  any  great  length  of  time.  They  are,  and  must  be,  as  variable  as  t  he 
seasons,  and,  in  some  instances,  as  the  winds  and  waves.  If  the  Gov- 
ernment could,  through  an  officer  or  commission  duly  authorized,  co 
operate  with  a  commission  or  delegation  created  by  the  transportation 
companies,  with  power  to  enforce  their  agreements  and  rules,  rates 
might  be  made  more  uniform  and  stable  than  they  now  are.  But  so 
long  as  competition  and  the  laws  of  trade  and  of  supply  and  demand 
exist,  and  no  power  exists  to  control  the  action  of  the  companies,  great 
difficulties  must  be  experienced  in  making  rates  uniform  and  stable.  I 
believe  it  will  be  impossible  to  do  it. 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  inter-State  commerce.  * 

MAXIMUM  AND  MINIMUM  BATES'. 

It  would,  no  doubt,  be  a  great  blessing  to  many  railroad  companies  if 
maximum  and  minimum  rates  could  b&  established  and  maintained; 
but  I  do  not  believe  it  is  possible.  What  would  be  a  high  maximum 
Kite  for  one  line  would  be  entirely  too  low  for  another.  Many  of  our 
railroad  companies  own  or  control  and  operate  lines  of  ocean,  lake,  and 
river  steamers,  and  thus  enjoy  advantages  which  companies  deprived 
of  and  unable  to  command  cannot  compete  with.  The  stronger  com 
panics  can  transport  at  rates  that  would  bankrupt  the  weaker  lines. 
The  weaker  lines  must  submit  to  the  stronger  or  be  forced  out  of  the 
traffic  of  inter-State  commerce. 

A  minimum  rate  that  would  fairly  compensate  one  line  would  leave 


INTERSTATE    COMMF.IUT..  87 

the  traffic  on  another  line  unmoved,  or  bankrupt  the  company  at  the 
same  low  rates.  It  is  very  evident  that  many  of  the  railroad  companies 
of  this  country,  as  now  organized,  are  transporting  at  rates  too  low  to 
enable  them  to  pay  interest  on  their  debts,  without  any  dividends  on 
their  capital  stock.  If  this  state  of  things  continues  with  them,  bank- 
ruptcy must  be  the  inevitable  result.  If  the  fixed  charges  of  these 
companies  could  be  reduced  to  a  point  where  they  could  be  met  with 
reasonable  certainty,  this  calamity  might  be  averted,  but  until  this  is 
done  nothing  but  a  large  increase  of  traffic  can  avert  the  calamity. 
Whether  it  is  better  to  let  bankruptcy  come,  and  sales,  reorganizations, 
and  consolidations  follow  on  a  reduced  basis  of  stock  and  debt,  is  an 
important  inquiry.  Where  this  has  been  done  in  the  past,  in  many 
cases,  and  the  weak  lines  have  fallen  into  the  hands  of  stronger  ones 
on  a  large  reduction  of  fixed  charges,  the  public  has  generally  been  the 
gainer  in  reduced  rates  and  better  accommodations.  But  latterly  sales, 
consolidations,  and  reorganizations  have  been  made  on  terms  tending 
to  bankrupt  entire  systems.  If  all  the  railroads  of  the  country  could 
be  consolidated  into  a  few  important  lines  on  a  fair  basis  of  cash  value, 
and  brought  into  harmonious  action,  and  subject  to  judicious  Govern- 
ment supervision,  maximum  and  minimum  rates  for  the  through  traffic 
might  possibly  be  adopted.  But  even  then  the  water  lines  of  transpor- 
tation would  have  to  be  brought  into  harmony  with  the  railroad  lines. 

(5)  The  elements  of  costs,  the  conditions  of  business,  and  the  other  factors  that 
should  be  considered  iii  fixing  the  tariffs  on  inter-State  traffic. 

THE   COST   OF    TRANSPORTATION. 

There  are  so  many  elements  entering  into  the  cost  of  transportation 
that  it  is  difficult  to  state  them  all.  They  are  frequently  classified  by 
companies  in  their  records  into  numerous  heads  or  divisions,  such  as 
movement  expenses,  maintenance  of  road,  general  expenses,  and  interest, 
besides  numerous  other  details.  But  in  addition  to  these,  of  which  no 
record  is  kept,  are  the  elements  as  to  value  of  articles  transported,  supply 
and  demand,  competition  by  ocean  and  other  water  routes,  as  well  as  rail- 
road competition.  These  elements  are  so  varied  that  it  would  be  almost 
impossible  to  arrange  a  tariff  on  inter-State  commerce  embodying  all  of 
them.  Inter-State  traffic  by  rail  is  generally  a  mere  incident  to  local 
traffic,  and  can  always  be  done  at  very  low  rates.  If  every  railroad 
company  between  the  Atlantic  and  Pacific  Oceans  engaged  in  trans- 
porting the  inter-State  commerce  were  required  to  establish  and  adhere 
to  a  specific  rate  for  any  fixed  period,  the  law  could  hardly  be  enforced, 
and,  if  enforced,  the  traffic  would  cease. 

Again,  the  traffic  could  not  be  done  by  rail  on  a  fixed,  unvarying 
standard  of  rates'.  The  actual  cost  of  doing  the  work,  including  all  the 
elements  above  specified,  has  very  little  to  do  with  the  rates  obtained. 
If  every  company  over  whose  line  the  traffic  must  pass  were  confined 
to  a  rate  one-half  or  even  one-fourth  what  would  be  deemed  a  reason- 
able local  rate  the  traffic  would  not  be  moved.  A  company  owning  one 
of  the  great  trunk  line  railroads  of  this  country,  in  its  report  for  the  last 
year,  says  that  the  average  earnings  per  ton  per  mile  on  its  main  line 
and  branches  "was  y,/^-  of  one  cent."  Another  important  company, 
whose  main  line  is  partly  in  this  State  and  partly  in  Ohio,  reports  even 
a  less  rate  per  ton  per  mile.  Certainly  such  rates  cannot  give  cause  to 
the  shipper  for  complaint.  This  inquiry  seems  to  imply  that  rates  for 
inter-State  traffic  can  be  permanently  fixed  and  enforced.  I  do  not  believe 


88  INTERSTATE    COMMERCE. 

it  can  be  done  even  by  a  union  or  confederation  ot  all  the  companies 
engaged  in  the  traffic.  In  any  event,  there  must  be  frequent  changes 
of  rates. 

(6)  Should  any  system  of  rebates  or  drawbacks  be  allowed  T     If  so,  sbiould  such 
transactions  be  regulated  by  law  and  be  subject  to  official   inspection  or  approval  ? 
Or  should  they  be  entirely  prohibited  ? 

THE   PROHIBITION    OF   REBATES. 

"  Rebates  and  drawbacks "  should  be  prohibited  bylaw.  Notwith- 
standing the  proof  of  their  use  is  very  difficult,  and  may  be  almost  impos- 
sible, of  discovery  by  their  postponement  and  the  various  forms  in  which 
they  may  be  used  and  concealed,  a  prohibitory  law  might  have  some  re- 
straining influence,  though  the  policy  of  passing  laws  that  cannot  be 
enforced,  or  are  easily  evaded,  is  a  very  questionable  one. 

"  Rebates  and  drawbacks  "  are  the  offspring  of  wars  of  rates  between 
competing  lines,  and  are  of  no  lasting  benefit  to  transportation  compa- 
nies or  shippers.  They  tend  to  demoralize  the  management,  excite  jeal- 
ousies and  dissatisfaction  among  shippers,  and  are  a  fruitful  source  of 
the  popular  prejudice  against  this  class  of  corporations.  The  railroad 
system  of  the  country  is  so  extensive  and  complicated,  so  many  com- 
panies are  involved  in  the  through  traffic,  that  if  rates  are  agreed  upon 
and  established  for  a  time  by  a  number  of  companies,  the  failure  of  any 
one  of  the  connecting  lines,  however  small,  to  adhere  to  the  rates,  de- 
stroys the  harmony  and  affects  all  lines.  No  power  now  existe  to  pre- 
vent the  cutting  of  rates.  All  the  efforts  of  the  trunk  lines'  manage- 
ment for  several  years  past  has  failed  to  fully  accomplish  the  desired 
object,  and  it  would  seem  that  the  companies  need  quite  as  much  help 
to  sustain  their  organizations  and  restrain 'the  unruly  members  as  the 
public  against  the  faults  and  injuries  suffered  from  them.  If  railroad 
compacts,  entered  into  in  good  faith  and  on  a  just  basis  for  the  mainte- 
nance of  rates,  could  be  sanctioned  and  enforced  by  law,  and  all  com- 
panies would  unite,  the  temptation  and  motive  to  resort  to  "  rebates 
and  drawbacks  "  would  be  taken  away,  and  they  would  cease. 

An  agreement  between  all  the  transportation  companies  in  this  coun- 
try and  adjoining  foreign  countries,  participating  in  the  through  traffic, 
legalized  and  its  violation  punished,  would  effectually  abolish  "  rebates 
and  drawbacks."  Of  course,  I  refer  to  rebates  and  drawbacks  given  se- 
cretly, to  the  advantage  of  one  shipper  over  another,  resulting  in  the 
practical  reduction  of  rates.  Many  instances  might  be  given,  if  large 
shippers  or  railroad  companies  would  expose  them,  where  thousands  of 
dollars  have  been  annually  paid  back  to  an  important  firm  or  shipper 
as  drawbacks.  But  where  "  rebates  or  drawbacks  "  are  made  to  adjust 
errors  in  weights  or  overcharges,  or  to  correct  mistakes,  they  are  just 
and  right,  but  ought  to  be  called  by  some  other  name. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  doing  an  inter- 
State  business  be  permitted,  or  should  they  be  entirely  prohibited  by  law  ?    If  they 
should  be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agree- 
ments to  be  made  public  and  subject  to  official  approval  T 

The  practice  called  "pooling  "is  resorted  to  by  railroad  companies 
for  the  purpose  of  maintaining  rates  agreed  upon  to  alj  shippers  at 
competing  points,  and  to  prevent  the  cutting  of  rates  at  such  points. 
This  method  has  been  in  use  for  many  years  in  this  and  other  countries, 
and  wherever  established  on  a  just  basis  and  continued  has  proved 
beneficial  to  railroad  companies  and  no  injustice  to  shippers  and  the 
public  generally.  The  evils  resulting  from  the  practice  of  cutting  rates 


INTERSTATE   COMMERCE.  89 

are  very  great  both  to  railroad  companies  and  the  public.  It  leads  to 
dangerous  speculations  and  demoralizes  the  business  of  the  country. 
Properly  regulated  and  subject  to  official  recognition  and  approval, 
"  pools "  would  be  largely  beneficial  and  their  publicity  unobjection- 
able. 

(8)  Should   provision  be  made  by  law  for  securing  to  shippers  the  right  to  select  the 
lines  and  parts  of  lines  over  which  their  shipments  shall  be  transported  f 

Ordinarily  every  shipper  has  the  right  to  select  the  route  he  will 
travel  or  his  shipment  shall  go,  but  this  right  must  be  subject  and  sub 
ordinate  to  the  rights  of  the  transportation  companies.  Circumstances 
may  render  it  inconvenient,  more  expensive,  or  impossible  for  the  rail- 
road company  receiving  the  traffic  to  send  it  by  the  route  chosen  by 
the  shipper.  The  company  may  have  connections  and  alliances  with 
other  lines  than  the  one  chosen.  There  can,  however,  hardly  ever  arise 
any  serious  conflict  between  the  shipper  and  the  transportation  com- 
panies on  this  subject.  Every  company  is  anxious  to  secure  traffic 
and  at  the  same  time  retain  the  good  will  and  patronage  of  shippers. 
It  is  the  study  and  effort  of  every  company  to  popularize  its  own  line, 
and  the  choice  of  a  shipper  will  always  be  accepted,  when  not  at  serious 
inconvenience,  loss,  or  expense  to  the  company.  I  think  it  would  be  in- 
judicious to  take  the  control  of  this  matter  out  of  the  hands  of  the  trans- 
portation companies  and  give  it  by  law  to  the  shipper. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  passen- 
gers and  freights  by  all  the  corporations  engaged  in  inter-State  commerce  be  best 
secured? 

This  is  one  of  the  most  difficult  questions  in  the  entire  series  to  an- 
swer satisfactorily,  and  furnishes  opportunity  for  the  presentation  and 
discussion  6f  all  the  evils  and  difficulties  involved  in  the  subject  of 
transportation.  But,  without  going  into  the  discussion  here,  I  will  only 
say  that,  in  my  opinion,  no  positive  or  fixed  "method"  can  be  adopted 
at  present.  A  perfect  union  and  confederation  between  all  the  lines  in 
the  entire  system  of  inter  State  transportation,  with  a  commission  or 
court  of  arbitration  recognized  and  authorized  by  law  to  enforce  obedi- 
ence and  compliance  with  the  terms  or  awards,  would  go  far  towards 
establishing  a  uniform  system,  and  might  in  time  become  reasonably 
successful  in  correcting  many  of  the  evils  and  difficulties  now  existing. 
But  it  must  be  a  matter  of  growth  from  time  and  experience.  Bates 
must  always  be  more  or  less  changeable,  and  any  method  must  be  made 
flexible  in  order  to  meet  changes  and  contingencies  that  may  arise. 

(10)  Should  corporations  engaged  in  inter-State  commerce  be  permitted  to  charge 
a  lower  proportionate  rate  for  a  long  than  for  a  short  haul?    Does  the  public  interest 
require  any  legislation  on  that  subject  T 

Undoubtedly  there  are  cases  where  "corporations  engaged  in  inter- 
state commerce?  do  and  should  be  allowed  to  charge  more  in  proportion 
for  a  short  than  for  a  long  haul.  Were  this  right  prohibited  by  law,  it 
would  prevent  the  movement  by  rail  of  a  large  amount  of  the  commerce 
of  the  country  and  nullify  much  of  the  competition  in  transportation  busi- 
ness, which  is  of  great  value  to  the  people  in  many  localities  where  ocean 
and  other  water  transportation  exists  in  competition  with  railroad  trans- 
portation. 

THE  DIFFERENCE  BETWEEN  THROUGH  AND  LOCAL  RATES. 

One  cause  of  the  present  complaints  is  that  the  through  and  local 
rates  are  not  properly  adjusted.  The  local  or  short  line  shipper  cannot 


90  INTERSTATE    COMMERCE. 

understand  why  the  through  rates  should  be  less  than  1  cent  a  ton 
]»er  mile,  while  he  is  compelled  to  pay  two  or  three  cents.  I  know  an 
instance  in  my  own  experience  where  a  miller  complained  that  wheat 
brought  to  his  mill  from  another  State  for  conversion  into  flour  was 
charged  so  much  more  than  a  miller  100  miles" beyond  him,  shipping 
from  the  same  point,  could  convert  his  wheat  into  flour  and  ship  it  back  the 
hundred  miles  and  undersell  the  other  miller  in  his  own  town.  This 
seemed  an  unjust  discrimination,  and  when  the  railroad  company  was 
called  on  for  explanation  and  the  reason  for  the  difference  in  the  rate, 
gave  among  other  reasons,  that  the  longer  haul  was  to  the  terminus  of 
its  line,  to  which  point  all  its  trains  were  compelled  to  run,  whether 
with  loaded  or  empty  cars ;  that  if  it  did  not  carry  to  the  terminal  point 
at  the  low*  rate  its  cars  would  go  empty;  that  from  the  point  of  ship- 
ment to  the  terminus  of  its  line,  three  other  lines  were  in  direct  com- 
petition with  it,  one  of  which  was  a  water  route,  and  all  the  companies 
carried  at  the  same  rate  between  the  two  points ;  that  it  was  compelled 
to  accept  the  low  rate  for  the  long  haul  or  abandon  the  traffic,  on  which 
a  small  profit  was  obtained  in  connection  with  the  local  business  on  the 
line.  The  local  rate  was  shown  to  be  reasonable  and  below  the  rates 
allowed  by  its  charter  and  the  laws  of  the  States  through  which  its  line 
ran.  And  that  it  was  not  responsible  for  the -injury  to  the  miller  at  1  lie 
end  of  the  short  haul.  That  was  the  misfortune  of  his  location.  IT  it 
were  to  carry  all  its  traffic  at  the  low  through  rate  it  would  soon  become 
bankrupt.  The  adjustment  of  rates  on  every  line  is  a  difficult  matter, 
requiring  experience  and  a  scientific  knowledge  of  the  subject  to  deal 
at  the  same  time  fairly  with  the  shipper,  whose  patronage  and  confi 
deuce  is  desired,  and  to  yield  a  just  and  fair  revenue  to  the  company 
sufficient  for  its  support  and  maintenance. 

The  right  to  adjust  tariffs  must  be  left  with  the  transportation  com- 
panies, subject  only  to  restrictions  against  extortion  in  rates. 

The  only  legislation  that  is  needed  on  this  subject,  it  seems  to  me,  is 
to  legalize  and  enforce  the  contracts  which  transportation  companies 
will  voluntarily  make,  and  punish  their  violation  as  the  violation  of  other 
contracts  are  punished.  I  believe  the  railroad  companies  would  gladly 
accept  such  a  law. 

(11)  Should  any  concession  in  rates  be  allowed  to  large  shippers  except  such  as  repre- 
sent the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments  and  should  such  concessions  be  made  known  to  the  public  f 

Undoubtedly  some  "concessions"  should  be  made  to  a  shipper  who 
has  invested  large  capital,  given  employment  to  many  laborers,  and 
arranged  for  the  shipment  of  hundreds  of  car-loads  continuously,  over 
the  shipper  who  only  furnishes  a  few  car-loads,  at  long  or  short  intervals. 
It  is  the  advantage  conceded  to  wholesale  over  retail,  which  prevails 
and  is  recognized  in  every  other  class  of  business  and  trade.  A  reason- 
able concession  in  rates  for  large  and  continuous  shipments  tends  to 
develop  and  enlarge  the  resources  and  increase  the  commerce  of  the 
country.  !New  and  important  business,  in  many  localities,  has  been  de- 
veloped, and  large  shipments  and  new  industries  created  by  these  con- 
cessions, which  would  not  otherwise  have  existed. 

Nor  can  these  concessions  be  measured  or  determined  by  the  difference 
in  the  expense  of  hauling  large  shipments  over  small.  What  the  con- 
cessions shall  be,  must  be  left  for  the  most  part  to  the  discretion  of  the 
managers  of  the  companies  and  the  parties  directly  interested,  under 
the  various  circumstances  surrounding  each  case.  If  a  commission  were 
created,  similar  to  the  "  Board  of  Trade  "  (so  called)  in  England,  which 
could  act  as  arbitrator  between  the  companies  and  snippers,  there  would 


INTERSTATE    COMMERCE.  91 

be  no  objection  to  making  the  concessions  known  to  the  public.  It 
might  stimulate  and  encourage  new  and  important  enterprises.  Secret 
rales  should  always  be  avoided;  they  tend  to  excite  suspicions,  jealousies, 
and  prejudice  against  the  management  of  the  transportation  business. 

(12)  Slnmld  corporations  engaged  in  inter-State  commerce  be  required  to  adopt  a  uni- 
i'orni  system  of  accounts? 

So  far  as  the  information  desired  and  advantageous  to  the  public, 
intended  for  publication  by  a  commission  or  bureau  of  the  Government, 
it  might  be  desirable  to  have  all  accounts  of  a  uniform  character.  But 
it  would  be  very  difficult,  if  not  impossible,  for  all  transportation  com- 
panies to  adopt  a"  uniform  system  of  accounts.  Many  things  incident 
to  the  accounts  of  one  company  do  not  appear  or  belong  in  those  of 
another.  Scarcely  any  two  companies  keep  the  same  classification  or 
division  of  items  in  their  records.  It  would  not  be  difficult  to  formulate 
a  series  of  questions  adapted  to  any  and  every  ?' corporation  engaged 
in  inter  State  commerce,"  the  replies  to  which  could  be  easily  made  from 
.any  system  of  accounts  or  records  that  would  furnish  all  the  informa- 
tion necessary  for  a  clear  and  full  understanding  of  the  operations  of 
the  various  companies.  They  could  be  tabulated  and  presented  to  the 
public  in  printed  reports.  Many  of  the  States  have  commissioners  who 
collect  very  full  and  explicit  iuformatiqn  from  railroad  and  telegraph 
companies,  which  are  printed  and  distributed  among  the  people.  I  do 
not  think  a  uniform  system  of  accounts  could  be  adopted  by  all  corpora- 
tions engaged  in  inter-State  commerce,  nor  do  I  regard  it  as  important 
they  should. 

(1;$)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government?  If  so,  what  information  as  to  their  earnings,  expenses,  and 
operations'should  such  reports  contain? 

If  the  Government  were  to  establish  a  commission  or  create  a  bureau 
for  the  purpose  of  collecting  and  disseminating  information  on  the  sub- 
ject of  inter-State  eommer.ce  and  its  transportation,  it  would  be  desira 
able  and  necessary  to  have  full  reports  as  to  the  location  of  the  differ- 
ent lines,  their  length, cost  of  building  and  equipment,in  proper  detail; 
how  much  of  their  cost  is  represented  by  bonds  or  other  indebtedness 
and  stock ;  a  full  report  of  earnings  and  expenses ;  the  different  sources 
of  earnings,  and  the  various  items  or  channels  of  expenses;  rates 
(maximum  and  minimum)  of  passengers  and  freight;  accidents  result- 
ing in  injury  or  loss  of  life  and  the  causes  thereof,  and  any  other  mat- 
ters desirable  for  the  commission  to  know  in  order  to  a  clear  and  full 
understanding  of  the  condition  and  operations  of  the  companies.  The 
reports  made  to  State  commissioners  are  in  many  cases  full  and  ex- 
plicit enough.  The  annual  reports  of  officers  of  many  of  the  corpora- 
tions to  the  stockholders  contain  nearly  all  the  facts  and  information  for 
the  year  sufficient  for  the  purpose.  There  are  and  will  be  in  any  full  re- 
port matters  that  the  general  public  will  have  little  or  no  interest  in, 
and  it  should  properly  be  left  with  the  Commission  or  Bureau  to  present 
to  Congress  and  the  public  so  much  as  might  be  deemed  valuable  for 
the  public  good.  The  benefit  of  these  full  reports  would  be  to  enable 
the  Commission  to  understand  the  true  condition  and  wrants  of  the  cor- 
porations and  their  obligations  to  the  public,  and  would  enable  them  to 
suggest  such  legislation  ami  supervision  as  was  found  judicious  and 
practicable. 

(14)  In  making  provision  for  Ncmriug  cheap  transportation,  is  it  or  is  it  not  impor- 
tant that  the  Government  should  develop  and  maintain  a  system  of  water  routes? 

The  Government  has  already  spent  many  millions  of  dollars  for  the 


92  INTERSTATE    COMMERCE. 

"development  and  maintenance  of  water  routes,"  and  is  every  year  add- 
ing to  these  expenditures.  No  improvements  except  the  building  of  rail- 
roads have  done  so  much  for  the  improvement  and  development  of  the 
country  as  the  opening  of  water  routes.  Ocean,  coast,  river,  and  canal 
facilities  and  improvements  were  at  one  time  the  only  means  for  the 
transportation  of  the  people  and  the  commerce  of  the  country.  Great 
liberality  has  been  exhibited  by  the  Government  in  this  direction.  It  is 
undoubtedly  for  the  interest  of  the  country  and  the  people  that  the 
water  routes  should  be  maintained  and  further  developed  as  the  neces- 
sities of  the  country  may  require.  They  are  very  powerful  in  their  cou- 
serative  influence  upon  the  rates  of  fare  and  freights  of  railroad  com- 
panies. As  the  country  improves  and  increases  in  population  these 
lines  of  coEftmunication  will  become  in  many  localities  more  and  more 
important.  It  is  the  cheapest  means  of  transportation  that  can  be  had 
in  many  parts  of  the  country,  and  in  many  places  the  people  are 
wholly  or  in  part  dependent  upon  them.  While  they  are  rivals  or  com- 
petitors in  many  cases  of  the  railroad  companies,  that  fact  need  not  be 
a  serious  injury  to  the  general  railroad  interests.  They  are  often  used 
in  connection  with  railroads  in  forming  lines  of  through  traffic,  and  can 
be  used  to  great  advantage  in  transporting  many  articles  of  commerce 
that  will  not  always  bear  transportation  by  all  rail. 

THE  HARMONIOUS  DEVELOPMENT   OF   TRANSPORTATION    FACILITIES. 

I  do  not  wish  to  be  understood  as  advocating  rates  so  low  that  the 
railroad  interests  of  the  country  shall  be  injured.  There  is  no  necessity 
for  any  such  result,  nor  would  the  country  or  people  be  benefited  by 
such  a  result.  I  believe  the  water  and  rail  routes  can  be  so  harmonized 
and  united  that  both  can  prosper.  Improvements  and  inventions  are 
rapidly  demonstrating  that  transportation  by  rail  can  be  done  in  many 
cases  as  cheaply  as  by  water.  Improvements  and  inventions  are  steadily 
going  forward  and  are  of  great  value  in  reducing  expenses  and  econo- 
mizing the  movement  of  the  commerce  Of  the  country.  While  railroad 
companies  complain  of  the  ruinously  low  rates  of  fare  and  freight,  it  is 
not  so  much  the  fault  of  the  rates  as  the  large  fixed  charges  and  lack 
of  traffic  on  many  roads.  Some  of  the  most  prosperous  and  paying 
roads  of  the  country  do  not  complain  of  low  rates  and  still  pay  interest 
on  their  debts  and  dividends  on  their  stock,  proving,  I  chink,  that 
proper  economies  in  management  and  in  operating  lines  built  at  actual 
cash  cost  will  enable  them  in  many  cases  to  make  rates  still  lower  and 
at  the  same  time  maintain  their  property  on  a  fair  paying  basis.  Un- 
doubtedly more  railroads  are  built  than  the  present  wants  of  the  coun- 
try require.  But  this,  is  in  great  measure  the  fault  of  the  earlier  roads 
built,  whose  stock  has  been  increased  or  watered  and  debt  enlarged  for 
the  purpose  of,  buying  rival  lines  built  for  speculation  and  not  at  pres- 
ent needed.  Had  proper  economy  been  exercised  in  building  and  man- 
aging many  of  the  earlier  lines,  the  fixed  charges  would  have  been  so 
far  reduced  by  this  time  that  parallel  and  competing  lines  could  not 
have  been  built  to  compete  against  the  rates  that  could  have  been 
adopted  by  the  earlier  lines.  Instead  of  reducing  fixed  charges  and 
expenses,  many  parallel  and  competing  lines  have  been  bought  up  at 
a  large  profit  to  the  proprietors  and  builders,  and  thereby  the  purchas- 
ing companies  have  so  far  increased  their  stock  and  debt  that  their 
revenues  are  insufficient  to.  yield  interest  and  dividends  at  the  present 
reduced  traffic  and  low  rates.  Speculations  have  been  rife  and  interest 


INTERSTATE    COMMERCE.  93 

and  dividends  overlooked.  Hence,  when  traffic  is  light,  the  railroad 
interests  of  the  country  must  suffer  and  nearly  all  other  business  of  the 
country  sympathizes  with  it. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  inter-State  commerce  be 
best  enforced  ?  Should  a  commission  or  other  especial  tribunal  be  established  to 
carry  out  the  provisions  of  any  law  Congress  may  enact? 

The  experience  of  the  past  five  years  proves  that  it  will  be  very  diffi- 
cult to  secure  any  judicious  legislation  for  the  regulation  of  inter-State 
commerce.  Members  of  Congress  are  not  all  well  informed  on  the  sub 
ject,  and,  where  such  immense  interests  are  involved,  hesitate  to  vote 
for  any  measure  for  fear  -of  doing  more  harm  than  good.  Great  lack  of 
knowledge  on  the  subject  exists  among  the  masses  of  the  people,  and  a 
great  deal  of  prejudice  and  misapprehension  exists  among  them  in  re- 
gard to  transportation  companies.  They  are  regarded  by  many  as  great 
monopolies,  endeavoring  to  rob  the  people,  make  themselves  richer  and 
the  poor  poorer.  The  railroad  managers  who  are  making  honest  and 
earnest  efforts  to  adjust  their  affairs  on  a  sound  and  healthy  basis  are 
not  agreed  among  themselves  as  to  the  wisest  and  best  methods  to  be 
adopted,  and  are  unable  or  unwilling  to  suggest  such  legislation  as 
might  aid  them,  fearing  that  there  might  be  coupled  with  it  some  ob- 
jectionable provisions.  Others  think  that  transportation  companies 
can  work  out  their  own  salvation  and  need  no  help  from  Congress. 
This,  however,  does  not  accord  with  their  own  reports  of  failure  or  of 
indifferent  success  in  the  last  four  or  five  years. 

*  THE   SOLUTION   OF   THE   PROBLEM  A  WORK   OF   TIME. 

It  is  claimed  that  the  railroad  interests  of  the  country  have  never 
been  in  so  depressed  a  condition  as  at  the  present  time.  Many  of  the 
companies  are,  like  drowning  men,  catching  at  straws.  Eager  for  busi- 
ness, they  resort  to  rate  cutting,  paying  rebates,  drawbacks,  or  commis- 
sions, which  absorb  all  profits  and  demoralize  the  entire  management 
of  the  whole  system  and  bring  discredit  upon  it.  There  is  not  traffic 
enough  to  employ  all  the  equipment  and  facilities  of  many  of  the  roads. 
In  many  places  not  half  the  traffic  is  obtainable  that  could  be  carried 
with  little  or  no  additional  expense.  Hence  every  means  is  resorted  to 
to  get  business.  Compacts,  agreements,  and  pools  entered  into,  appar- 
ently in  good  faith,  are  easily  broken,  and  no  power  exists  to  prevent 
it.  We  hear  almost  daily  of  the  violation  by  some  line  of  its  agreement 
with  other  lines.  If  some  legislation  by  Congress  could  reach  these 
evils  and  remove  them  millions  of  dollars  could  be  saved  annually  to 
the  railroad  interests  of  the  country  without  injury  to  the  shippers  or 
public,  but  positive  good. 

"  How  can  this  be  done,"  your  committee  inquire. 

No  one  yet  has  been  able  to  point  out  a  sure  and  safe  method.  In  so 
important  a  matter  as  this,  involving  such  vast  interests,  it  is  better  to 
go  slow,  than  by  haste  fall  into  errors  and  mistakes.  I  believe  the 
managers  of  the  trunk  lines  between  the  Mississippi  Eiver  and  Atlan- 
tic seaboard  and  north  of  the  Ohio  .River  are  making  an  earnest  and 
honest  effort  to  correct  the  evils  surrounding  them,  and  no  doubt  have 
made  some  progress,  which  is  not  apparent  to  the  public.  But  they  ac- 
knowledge their  inability  to  carry  out  their  own  plans  and  purposes. 
Doubtless  there  is  a  lack  of  integrity  and  good  faith  among  certain 
railroad  officials.  The  ambition  and  eagerness  to  acquire  wealth  rapidly 
lead  to  speculations  among  officials,  who  sometimes  resort  to  improper 
methods,  and  there  is  no  power  or  law  to  reach  them. 


94  INTERSTATE    COMMERCE. 

THE   PROVINCE   OF   A   COMMISSION. 

As  1  have  suggested  in  my  replies  to  several  of  your  inquiries,  a 
commission  created  by  the  Government,  with  ample  powers  of  inquiry 
and  authorized  to  co  operate  with  and  aid  the  managers  of  transporta- 
tion companies  in  carrying  out  and  enforcing  their  own  just  contracts  ; 
a  commission  competent  and  expert  in  the  transportation  business,  in- 
dustrious and  vigilant  in  searching  for  and  exposing  the  evils  to  be  over- 
come could,  in  uiy  judgment,  with  the  support  and  co-operation  of  the 
companies  themselves,  work  out  a  system  that  would  ultimately  cure 
most  of  the  evils  now  existing.  But  it  would  be  a  work  of  time,  pa- 
tience, and  experiment.  No  great  judicial  power  should  be  given  to  the 
commission,  but  the  fullest  power  for  inquiry,  research,  and  examina- 
tion, and  perhaps  authority  to  enforce  rules  and  regulations  agreed  upon 
by  transportation  companies  and  prosecute  offenders  and  violations  of 
proper  rules  and  agreements  in  the  courts  of  the  country,  at  the  expense 
of  the  Government,  to  be  reimbursed  by  violators  when  proven  guilty. 

The  millions  that  could  be  saved  to  the  railroad  interests  of  the  country 
by  the  adoption  of  a  practical  system  would  justify  a  liberal  expendi- 
ture by  the  Government  in  making  the  experiment  and  employing  the 
best  talent  in  the  laud  for  a  length  of  time  sufficient  to  acquire  the 
necessary  information  and  make  the  proper  test.  Such  a  commission 
would  inspire  confidence  among  the  people  and  the  transportation  com- 
panies. 

The  very  creation  and  organization  of  such  a  commission  would  les- 
sen many  of  the  real  as  well  as  imaginary  evils  which  now  exist.  The 
people  would  look  to  such  a  commission  with  hope  and  confidence  that 
all  was  being  done  or  would  bo  done,  that  could,  to  abate  evils  and 
wrongs  and  would  patiently  wait  a  fair  trial.  I  believe  such  a  commis- 
sion, with  powers  of  inquiry  and  perhaps  of  arbitration,  would  prove  of 
value  in  preventing  violent  outbreaks  by  employe's  and  their  sympa- 
thi/ers,  which  have  occurred  and  are  liable  to  occur  again,  to  result  in 
bloodshed  and  great  losses  and  damage  both  to  the  corporations  and 
people. 

I  have  already  made  this  communication  much  longer  than  I  intended. 
Allow  me  to  close  with  the  expression  of  ray  earnest  hope  that  the 
labors  of  your  committee  in  this  important  matter  may,  ere  long,  be 
crowned  with  success  in  the  passage  by  Congress  of  such  laws  on' this 
subject  as  shall,  when  executed,  give  to  our  transportation  manage- 
ment a  high  character  and  credit  both  at  home  and  abroad. 


THE  BURLINGTON  BOARD  OF  TRADE. 

Statement  by  Ezra  A.  ttrenizer,  secretary  Board  of  Trade,  Burlington, 

loica. 

In  behalf  of  the  Burlington  Board  of  Trade  1  beg  to  submit  the  fol- 
lowing responses  to  your  interrogatories  as  reflecting  in  some  degree 
the  views  of  our  citizens  upon  the  transportation  question  : 

(1)  We  would  leave  the  field  open  to  private  enterprise  and  general 
competition,  subject  to  the  supervision  of  a  national  commission.     . 

(2)  We  have  had  in  the  Western  .States  a  marked  decrease  in  freight 
rates  during  the  past  ten  years,  and  at  the  same  time  quite  a   number 


INTERSTATE    COMMERCE.  95 

of  railways  have  gone  into  bankruptcy.  This  indicates  to  our  minds 
that  in  the  effort  to  still  further  cheapen  transportation  charges  great 
care  and  discrimination  will  need  to  be  exercised  in  order  to  avert  in- 
justice to  invested  capital  and  disaster  to  the  community. 

(3  and  4)  Some  general  basis  of  rates  ought  to  be  reached  and  made 
public,  but  there  ought  to  be  lee-way  ror  such  fluctuations  within  a 
moderate  limit  as  the  exigencies  of  business  may  demand.  In  other 
words,  there  ought  not  to  be  any  arbitrary  restrictions  upoirthe  law  of 
supply  and  demand. 

(5)  The  cost  of  a  road  bed  and  rolling  stock  is  not  the  only  expendi- 
ture made  by  a  railway  company  in  building  and  equipping  its  line  and 
permanently  establishing  its  business.  There  ought  to  be,  therefore, 
such  reasonable  scope  in  any  limitations  that  may  be  imposed  as  will 
give  inducement  to  capital  to  seek  investment  ill  railway  properties  as 
readily -as  any  other  enterprise.  It  is  for  the  general  interest  of  the 
country  to  have  transportation  facilities  developed  equal  to  the  require 
ments  of  trade  and  commerce,  and  if  the  State  does  not  build  such  lines 
private^ capital  must  have  sufficient  inducement  to  do  it;  otherwise,  un- 
der a  hostile  policy,  the  lines  will  not  be  built  and  the  progress  of  the 
country  will  be  retarded. 

(G)  Rebates  and  drawbacks  are  only  roundabout  methods  of  reducing 
rates.  The  simplification  of  work  is  desirable  in  any  line  of  business, 
and  in  some  degree  is  an  element  of  the  cost  of  transacting  the  business. 
Under  a  national  system-  of  transportation  there  will  inevitably  be  a 
tendency  to  complications  in  the  effort  to  adapt  the  system  to  the  varied 
local  necessities  and  demands. 

(7)  Pool  contracts  are  desirable  to  prevent  railway  companies  ruin- 
ing each  other  and  demoralizing  business.     If  inhibited  by  the  Govern- 
ment care  should  be  taken  to  substitute  regulations  that  will  prevent 
alike  ruinous  competition  and  excessive  charges.     But  any  such  inhi- 
bition will  necessarily  bring  us  perplexing  problems  which  only  time 
and  long  experience  can  enable  the  commission  to  finally  adjust  on  a 
permanently  satisfactory  basis.     And  it  is  difficult  to  foresee^  how  any 
such  adjustment  can  be  reached  as  long  as  the  jurisdiction  of  the  na- 
tioual  commission  is  limited  to  roads  traversing  more  than  one  State. 

(8)  Shippers  ought  not  to  have  the  arbitrary  right  to  select  the  line 
of  transit  except  when  the  refusal  of  that  right  works  an  injury  or  a  loss 
to  the  shipper.     Such  a  right  might,  involve  a  loss  to  the  transporta- 
tion company  without  any  corresponding  gain  to  the  shipper.     This  is 
a  feature  that  ought  to  be  left  to  the  discretion  of  the  national  com- 
mission rather  than  to  be  regulated  in  fixed  terms  by  law. 

(9)  The  possibility  of  securing  uniformity  of  rates  can  only  be  de- 
veloped by  long  investigation  and  experiment.     The  first  step  might  be 
profitably  taken  by  the  adoption  of  a  uniform  classification  of  freights 
and,  possibly,  by  a  reduction  of  classes. 

(10)  Unquestionably  a  less  proportionate  rate  ought  to  be  charged 
for  a  long  than  a  short  haul.     A  uniform  proportionate  rate  for  long 
and  short  hauls  would  be  ruinous  alike  to  farmers,  merchants,  and  man- 
ufacturers of  the  interior  States  of  the  Republic.     No  legislation  is 
needed  except  to  sanction  the  principle  involved  as  a  basis  for  the 
authoritative  guidance  of  the  national  commission. 

(11)  Concessions  should  be  made  to  quantity  and  not  to  individuals, 
leaving  the  way  open  to  any  individual  or  association  to  take  ad  vantage 
of  large  shipments  with  the  same  facility  enjoyed  by  the  individual  or 
association  in  buying  land  or  merchandise  in  large  quantities.     This  will 
permit  of  private  or  co-operative  efforts  in  business  enterprises  on  an 


96  INTERSTATE    COMMERCE. 

equal  footing  with  individual  or  corporate  capital,  and  these  special 
rates  should  be  given  equal  publicity  with  the  common  rates. 

(12)  A  matter  of  minor  detail  of  greater  interest  to  the  transportation 
companies  than  to  the  general  public.  For  if  there  are  advantages  to 
be  reaped,  by  uniform  accounts  those  advantages  will  inure  to  the  com- 
panies, the  general  public  caring  little  for  a  question  of  book-keeping  that 
does  not  necessarily  involve  any  economic  question  concerning  shippers. 
But  in  the  nature  of  things  the  transportation  lines  and  the  national 
commission  will  gradually  develop  more  uniformity  of  accounts  as  the 
new  policy  of  national  supervision  grows  into  a  permanent  system. 

(14)  If  the  Government  is  to  take  the  supervision  of  the  interstate 
commerce  of  the  United  States  and  to  be  the  arbiter  between  the  people 
and  the  corporations,  it  would  not  be  good  public  policy  for  it  to  engage 
in  the  transportation  business  itself,  either  directly  or  indirectly,  and 
thus  become  a  party  at  interest  in  the  very  business  upon  which  it  is 
called  to  arbitrate.    Whatever  may  be  the  policy  of  the"  General  Gov- 
ernment relative  to  improving  natural  waterways  or  building  artificial 
ones,  it  is  not  legitimately  within  the  province  of  a  national  commission 
to  administer  upon  our  sea-coast,  lake,  and  river  navigation.    That  is 
an  element  of  the  transportation  problem  that  ought  not  to  be  con- 
sidered in  this  connection,  or  at  least  not  until  the  more  immediate 
necessities  of  overland  transportation  have  been  successfully  provided 
for.    By  attempting  too  much  at  first  there  is  danger  of  disastrous  mis- 
takes that  will  seriously  retard  the  growth  of  the  country  and  give 
permanency  to  evils  now  sought  to  be  remedied. 

(15)  We  venture  to  suggest  the  utility  of  a  national  commission  com- 
posed of  one  member  from  each  State,  which  shall  as  a  body  have  certain 
limited  powers  of  enacting  rules  and  regulations.     Out  of  its  member- 
ship there  shall  be  appointed  an  executive,  committee  of  five  who  shall 
be  charged  with  the  execution  of  the  rules  and  regulations  of  the  national 
commission  and  who  shall  devote  their  entire  time  to  the  routine  duties 
of  the  work  of  supervision,  their  doings  to  be  reported  at  stated  inter- 
vals to  the  full  board  of  the  national  commission  and  subject  to  its  ap- 
proval. 


SAN  FRANCISCO  CHAMBER  OF  COMMEECE. 

Statement  by  L.  L.  Baker  and  Alfred  P.  Elfelt,  of  the  committee  on  inter 
nal  trade,  on  behalf  of  the  Chamber  of  Commerce  of  San  Francisco,  Cal. : 

The  questions  involved  are  of  importance  to  the  whole  people,  and 
are  paramount  to  the  interest  of  any  one  individual  or  corporation. 
The  industries  of  the  country  have  been  for  a  number  of  years  in- 
debted largely  to  railroad  construction,  and  to  the  settlement  of  immi- 
gration upon  the  lines  of  new  railroads,  building  up  new  homes,  towns, 
and  cities  upon  lands  made  available  for  settlement  by  the  construction 
of  railroads.  Any  legislation  which  tends  to  cripple  the  continuance 
of  the  industries  thus  promoted  would  be  felt  by  the  nation  in  a  dimin- 
ished circulation  of  money  among  the  people,  the  investment  of  capital 
in  bonds  foreign  or  domestic,  or  any  other  thing  that  would  offer  secu- 
rity, instead  of  active  industries  that  benefit  the  whole  people  by  pro- 
moting constant  circulation  of  money  in  business  throughout  the 
country. 

(1)  Few  complaints,  if  any,  are  now  heard  of  extortion  or  unjust  dis- 
crimination in  interstate  commerce.  It  might  be  well  to  have  a  special 


INTEESTATE    COMMERCE.  97 

commission  appointed  whose  duties  should  be  to  hear  complaints,  to 
inquire  into  rates  and  unjust  discrimination  or  extortion,  but  these  men 
should  be  of  the  highest  character  and  have  a  thorough  knowledge  of 
railroad  matters.  Their  term  of  office  should  be  for  lite.  They  should 
hear  complaints  and  call  upon  the  railroad  companies  to  adjust  claims 
without  delay,  without  the  form  of  court  or  the  service  of  attorneys. 

(2)  The  present  tariff  of  rates  for  overland  traffic  is  considered  rea- 
sonable for  consumers,  but  just  discrimination  should  be  made  in  favor 
of  large  shippers,  who  carry  large  magazines  of  supplies  for  the  com- 
munities of  consumers  who  are  dependent  upon  them  for  their  constant 
needs.     The  reasonableness  of  this  rests  in  the  fact,  that  customers  of 
wholesale  houses  look  to  large  dealers  to  procure  their  supplies  at  rates 
to  compete  with  articles  purchased  in  other  markets ;  handling  or  storage 
expenses  must  be  added  to  first  cost  and  cost  of  transportation.    If 
Pit  tsburgh  is  the  central  point  for  iron,  a  wholesale  merchant  must  try, 
by  purchasing  in  large  quantity,  to  obtain  his  iron  there  at  large-quantity 
prices,  and  his  transportation  at  prices  in  proportion  to  the  quantity  to 
be  shipped,  so  that  the  man  who  is  obliged  to  buy  of  him  for  his  imme- 
diate needs  may  not  be  forced  to  pay  much  more  than  his  rich  neighbor, 
who  can  have  liis  supplies  from  foreign  markets,  although  no  greater 
consumer. 

(3)  Maximum  rates  should  be  made  public,  and  should  not  be  ad- 
vanced unless  for  good  cause  and  on  due  publication.    The  rest  of  the 
question  is  too  important  to  answer  fully  here.    If  the  Government 
owned  all  the  railroads,  they  could  be  kept  from  competing  with  each 
other,  even  if  one  road  was  worn  out  by  use,  while  the  other  could  not 
earn  its  expenses,  because  the  better  facilities  of  transportation  of  its 
competitor  could  not  be  overcome  by  reducing  rates. 

(4)  Answered  in  the  above. 

(5)  To  this  question  should  be  added  the  circumstances  which  would 
enable  traffic  to  turn  to  competing  routes.    As  far  as  this  city  is  con- 
cerned, the  overland  roads  must  compete  with  ships  via  Cape  Horn  and 
steamers  via  Panama. 

(0)  This  should  regulate  itself  by  competition,  as  too  rigid  laws  might 
tend  to  too  great  centralization  of  trade,  unless  the  Government  through 
some  .system  of  compensation  could  arrange  rates  upon  a  system  for  the 
beuuiit  of  the  whole  people  without  regard  to  profit,  as  the  Post  Office 
system  is  now  managed.  Then  it  would  undoubtedly  be  deemed  wise 
to  make  some  provision  for  common  points,  or  bases  of  supply,  and  Gov- 
ernment would  consider  the  facts  of  second  transportation  to  consumers 
or  small  purchasers,  as  from  San  Francisco  to  interior  points. 

(7)  If  a  commission,  appointed  as  suggested  in  the  answer  to  your 
first  question,  thought  pooling  contracts  or  agreements  not  for  the  best 
interests  of  both  railroads  and  people,  they  should  have  power  to  pro- 
hibit them. 

(8)  Shippers  should  be  protected  by  the  commission  in  the  exercise 
of  this  right,  because  overland  shipments  directed  over  northern  routes, 
if  perishable,  might  deteriorate  or  be  ruined  if  forwarded  by  a  southern 
route.    While  many  other  reasons  suggest  themselves,  this  is  deemed 
sufficient  reason  for  such  protection. 

(9)  By  the  Government  compensating  and  controlling  the  roads. 

(10)  It  seems  fair  that  there  should  be  a  lower  proportionate  rate  for 
a  long  haul  than  for  a  short  haul.    If  divers  interests  demand  some 
modification  of  this  principle  it  should  be  referred  to  the  commission 
before  alluded  to.    This  is  a  question  of  grave  importance,  involving 
the  interests  of  large  commercial  centers  as  well  as  the  interests  of 

16232  AP 7 


98  INTERSTATE    COMMERCE. 

sparsely  settled  sections  at  a  great  distance  from  markets,  whose  in- 
dustries languish  because  of  this  distance  from  commercial  centers. 

(11)  Concessions  should  be  made  to  large  shippers  who  keep  ware- 
houses, pay  taxes,  &c.,  at  points  of  delivery.    There  is  no  objection  to 
the  public  knowing  that  concessions  are  made,  because  the  wholesale 
and  retail  system  is  well  understood  by  the  people  at  large. 

(12)  If  from  experience  there  canbe  eliminated  a  system  of  accounts 
which  can  be  made  applicable  to  the  varied  interests,  then  it  would  be 
highly  important  to  make  it  uniform. 

(13)  Business  information  is  desirable.    All  corporations  whose  stock 
and  bonds  are  offered  to  the  public  should  be  obliged  to  make  annual 
statements,  as  well  as  banks  or  insurance  companies. 

(14)  Subsidies  should  be  granted  to  water  routes  by  the  Government, 
if  the  trade  was  not  sufficiently  renumerative  without  such  assistance, 
but  such  subsidy  should  be  regulated  by  the  stated  or  fixed  expenses 
and  the  annual  profits. 

(15)  Legislation  can  be  best  enforced  by  a  commission  as  before  stated, 
yet  the  benefit  of  any  legislation  would  depend  almost  entirely  upon 
the  reliability  and  ability  of  the  commission  appointed  to  carry  out  its 
provisions. 

For  want  of  time,  it  cannot  be  claimed  that  the  above  answers  or 
suggestions  have  had  full  and  mature  consideration,  yet  such  as  they 
are,  they  are  most  respectfully  submitted. 


EICHMOKD  GBAIN  AND  COTTON  EXCHANGE. 

Statement  by  Messrs.  John  Addison,  W.  G.  demons,  and  R.  A.  Dunlop, 
committee  on  behalf  of  the  Grain  and  Cotton  Exchange  of  Richmond, 
Va.: 

In  replying  to  your  communication  requesting  the  views  of  this  ex- 
change as  to  the  advisability  of  placing  the  control  of  the  railroads  in 
the  United  States  in  the  hands  of  the  General  Government,  with  a  view 
of  correcting  the  evil  of  discriminating  rates  for  freight  and  passenger 
traffic,  now  so  generally  the  subject  of  complaint,  we  have  to  say  that 
we  are  met  with  the  difficulty  that  many  believe  that  the  Constitution 
does  not  confer  the  power  upon  Congress  to  do  this  thing.  They  be- 
lieve that  the  power  to  regulate  the  commerce  between  the  States  which 
the  Constitution  does  give  refers  to  altogether  a  different  matter;  that 
the  railroads  are  creatures  of  the  several  States  through  whose  terri- 
tory they  pass,  and  were  chartered  by  the  States,  who  alone  have  the 
power  to  exercise  control  over  them.  We  believe  that  a  large  propor- 
tion of  our  people,  who  have  looked  into  the  subject,  take  this  view  of 
the  case. 

It  is  perhaps  unfortunate  that  this  is  so,  for  there  is  no  more  impor- 
tant question — and  we  desire  to  emphasize  the  statement — now  before  the 
people  of  this  country  than  the  railroad  question.  Complaints,  except 
from  the  favored  few,  are  universal  of  the  outrageous  discriminations 
by  these  monopolies,  and  it  is  easy  to  show  that  there  are  sections  of 
our  country  that  have  been  so  injured  by  discriminations  against  them 
that  instead  of  a  blessing  the  railroads  have  proved  a  curse,  and  it 
would  have  been  better  for  the  people  who  gave  the  right  of  way  if  a 
railroad  had  never  been  permitted  to  enter  those  States. 


INTERSTATE    COMMERCE.  99 

THE  EXPERIENCE   OF   GEORGIA. 

If  the  constitutional  difficulties  can  be  got  out  of  the  way,  and  it 
made  clear  that  Congress  has  the  right  to  control  the  railroads  under 
the  " interstate  commerce"  provision  of  the  Constitution,  we  believe 
there  would  be  no  serious  difficulty  in  the  way  of  Congress  adopting  a 
plan  which  would  meet  the  wants  of  the  country,  and  at  the  same  time 
be  just  to  the  railroad  companies.  As  an  illustration  of  what  can  be 
accomplished  in  this  direction,  when  the  power  exists  to  enforce  the  law, 
we  call  the  attention  of  your  committee  to  the  experience  of  the  State 
of  Georgia  in  dealing  with  the  railroad  question  in  that  State.  So  much 
had  the  people  of  Georgia  suffered  from  the  discriminating  rates  against 
them  by  roads  entering  the  State  from  the  north  and  the  west,  and 
their  inability  to  secure  relief  through  their  legislatures  (they  being 
wholly  under  the  influence  of  the  railroad  companies),  that  in  1877,  when 
an  election  was  held  to  elect  delegates  for  a  constitutional  convention 
to  form  a  new  constitution  for  the  State,  the  railroad  question  entered 
largely  into  the  canvass;  and  so  thoroughly  was  the  matter  discussed 
and  the  damaging  effects  upon  the  people  of  the  railroad  discrimina- 
tions against  them  exposed  by  the  candidates,  that  a  majority  in  favor 
of  making  a  constitutional  provision  regulating  the  railroad  traffic  were 
elected.  And  when  the  convention  met  and  framed  a  new  constitution 
an  article  was  made  to  carry  out  this  demand  of  the  people.  This  arti- 
cle of  the  new  constitution  made  it  the  duty  of  the  legislature  to  pass 
such  l.i  ws  regulating  the  railroad  traffic  as  should  be  just  and  equitable 
to  the  people  and  to  the  railroads.  In  1879  the  legislature  carried  this 
provision  into  effect  by  passing  a  law  creating  a  railroad  commission, 
giving  the  commissioners  full  power  to  regulate  the  freight  and  passen- 
ger traffic  on  all  roads  entering  the  State.  The  law  required  the  com- 
mission to  be  appointed  by  the  governor  and  to  consist  of  three  men, 
one  skilled  in  the  law,  one  skilled  in  railroad  management,  and  one 
familiar  with  general  business  affairs.  The  commissioners  were  duly 
appointed  and  entered  upon  their  work.  The  railroad  officials  at  once 
antagonized  the  efforts  of  the  commissioners  to  bring  about  the  needed 
reform,  and  the  courts  were  appealed  to  by  the  railroad  companies  to 
prevent  the  commissioners  from  exercising  the  power  conferred  on  them 
by  the  legislature.  The  commission  was  sustained  by  the  courts,  and 
for  the  past  three  years  the  operations  of  the  commissioners  had  not 
been  interfered  with,  and  the  workings  of  the  system  adopted  by  them 
have  been  so  satisfactory  that  other  States  are  considering  the  policy 
of  passing  similar  laws.  The  commissioners'  reports,  which  are  pub- 
lished semi-auuually,  show  that  the  citizens  of  Georgia  have  saved 
many  thousands  of  dollars,  that  the  railroad  companies  have  declared 
better  dividends,  and  railroad  stocks  appreciated  iu  value,  as  a  result 
of  the  commissioners'  management.  Two  interests  only  are  dissatisfied, 
viz,  high  railroad  officials  and  the  large  operators.  These  latter  oper- 
ate chiefly  from  points  far  distant  from  each  other,  say  from  the  cities 
of  the  West  and  the  North,  and  the  practical  effect  of  the  present  sys- 
tem is  to  make  the  whole  country  between  these  points,  from  which 
very  low  rates  are  secured,  tributary  to  these  large  operators  by  having 
to  pay  high  local  freights. 

INSTANCES  OF  DISCRIMINATIONS. 

It  is  charged,  and  the  charges  have  not  been  disproved,  that  for  a 
consideration  the  railroad  officials  give  to  the  large  shippers  of  the  West 


100  INTERSTATE    COMMERCE. 

rates  to  Eastern  markets  every  ton  of  which  nets  a  loss  to  the  railroad 
over  which  it  is  transported.  This  loss  is,  as  far  as  possible,  made  up 
by  imposing  high  rates  on  local  traflic. 

To  illustrate :  Within  the  last  six  mouths  the  rate  on  flour  from  Chi- 
cago to  Eichmond,  a  distance  of  some  1,100  miles,  was  28  cents  per 
barrel,  while  from  a  point  within  the  State  175  miles  distant  from  Eich- 
mond the  rate  was  57  cents.  The  same  discrimination  is  made  on  all 
farm  products  and  manufactured  goods. 

Another  evil  growing  out  of  this  system  is  that  it  enables  large  cap- 
italists to  crush  out  the  man  of  moderate  means,  and  virtually  gives 
them  the  control  of  the  markets.  We  think  the  practice  of  these  meth- 
ods by  transportation  companies  affords  substantial  grounds  of  com- 
plaint, and  should  be  corrected  by  the  States  or  by  the  General  Gov- 
ernment, if  it  has  the  power,  as  soon  as  suitable  legislation  can  be  had. 

RECOMMENDATIONS. 

In  answer  to  your  inquiries  we  say : 

(I)  Our  opinion  is  that  the  best  and  only  way  to  prevent  extortion 
and  unjust  discrimination  by  corporations  is  to  create  a  commission  to 
control  them,  with  full  power  to  execute  the  laics.     Power,  and  a  good 
deal  of  that,  is  the  only  thing  worth  a  cent  in  dealing  with  railroads. 

(3)  We  think  rates  should  be  published  and  not  be  allowed  to  change 
without  notice. 

(5)  The  elements  of  cost  and  competition  of  business,  we  think,  should 
be  considered  in  fixing  rates. 

(6)  Eebates  and  drawbacks  should  not  be  allowed.    They  defeat  the 
very  thing  we  are  trying  to  establish — uniform  rates. 

(7)  Pooling  contracts  should  not  be  allowed. 

(8)  Shippers  should  always  have  the  right  to  select  the  lines  over 
which  they  desire  to  ship. 

(9)  A  uniform  system  of  rates  can  best  be  secured  through  a  com- 
mission. 

(10)  If  short  hauls  cost  the  railroads  more  per  mile  than  long  hauls, 
equity  would  seem  to  entitle  them  to  charge  more.     This  we  consider  a, 
very  important  question,  which  can,  in  our  opinion,  only  be  properly 
adjusted  by  a  competent  commission.    The  increased,  if  such  be  the 
case,  is  the  only  ground  upon  which  concessions  should  be  made. 

(II)  No  concessions  should  be  allowed  large  shippers  except  such  as 
represent  the  actual  difference  in  the  cost  of  handling  shipments,  and 
such  concessions  should  be  made  public. 

(12)  It  is  not  necessary  that  railroads  should  be  required  to  adopt  a 
uniform  system  of  accounts.     We  don't  think  the  public  are  interested 
in  the  mode  of  keeping  their  accounts,  so  they  are  correct. 

(13)  Annual  reports  are  not  necessary. 

(14)  In  making  provision  for  securing  cheap  transportation  it  is  im- 
portant that  water  routes  should  be  developed  by  all  means.     We  be- 
lieve all  navigable  streams  should  be  developed  by  the  Federal  Gov- 
ernment. 

(15)  A  commission  with  ample  power  we  believe  the  only  means  by 
which  to  carry  out  legislation,  unless  a  new  Department  of  the  Govern- 
ment is  formed,  viz,  a  Cabinet  office,  to  be  called  the  Eailroad  Depart- 
ment, to  be  filled  by  the  President  the  same  as  other  Cabinet  offices. 
We  are  not  sure  but  this  would  be  the  best  thing  to  do,  for  certain  it  is 
there  would  be  no  more  important  office  in  the  Government,  nor  one 


INTERSTATE    COMMERCE.  101 

that  would  require  greater  acquirements  in  solid  statesmanship  to  fill. 
We  are  much  inclined  to  favor  this  plan,  for  the  railroad  influence  has 
become  so  great  that  legislation  is  largely  controlled  by  it,  both  in  Con- 
gress and  in  the  State  legislatures,  and  unless  taken  in  hand  by  the 
Governmen*  at  an  early  day  will  soon  be  beyond  control.  It  has  almost 
reached  that  point  now. 


THE  TEADEES  AND  TEAYELEES'  TOIOK 

Statement  of  the  Traders  and  Travelers'  Union,  No.  287  Broadway,  New 
York,  by  Daniel  G.  Bobbins,  president. 

(1)  The  best  method  of  preventing  extortion  and  unjust  discrimina- 
tion is  by  co-operation"  on  the  part  of  the  public,  and  the  withdrawal  of 
business  from  any  corporation  practicing  extortion. 

(2)  Trunk  line  rates,  at  present,  appear  to  be  reasonable,  but  could 
be  more  justly  graded  by  proper  reclassification  of  goods. 

(3)  We  favor  publicity  of  rates,  and  think  that  all  changes  should  be 
made  public.    Publicity  of  rates  will  assure  practical  uniformity  by  the 
recognized  laws  of  political  economy.     We  favor  equality  of  rates,  con- 
ditioned upon  equality  of  service  rendered. 

(4)  We  deem  the  establishment  of  maximum  and  minimum  rates  im- 
practicable. 

(5)  Among  the  factors  which  should  be  considered  in  fixing  rates  of 
interstate  traffic  are  value  of  goods,  bulk,  and  weight.    This  can  only 
be  practically  met  by  a  more  equitable  classification  of  goods  than  at 
present  exists. 

(0)  We  think  the  system  of  drawbacks  should  be  entirely  prohibited, 
if  such  prohibition  can  be  effectually  enforced. 

(7)  Pools  between  railroad  companies  should  be  entirely  prohibited 
by  law. 

(8)  Stringent  provision  should  be  made  for  securing  to  shippers  the 
right  to  select  the  lines  over  which  their  shipments  shall  be  trans- 
ported. 

(9)  Our  experience  has  suggested  no  method  by  which  uniform  rates 
can  be  secured. 

(10)  We  think  it  reasonable  that  corporations  engaged  in  interstate 
commerce  should  be  permitted  to  charge  a  lower  rate  in  proportion  for 
a  long  than  for  a  short  haul.    We  do  not  think  the  public  interest  re- 
quires any  legislation  on  that  subject. 

(11)  We  believe  that  no  concessions  in  rates  should  be  allowed  for 
large  shipments  over  small  shipments.    All  shipments  should  be  at 
uniform  rates. 

(12)  A  uniform  system  of  accounts  is  desirable,  so  far  as  the  same 
may  be  practicable. 

(13)  We  think  that  annual  reports  should  be  made  to  the  Govern- 
ment, showing  in  detail  earnings,  expenses,  operations,  and  condition  of 
each  road. 

(14)  We  consider  it  important  that  the  Government  should  develop 
and  maintain  a  system  of  water  routes  in  making  provision  for  securing 
cheap  transportation. 

(15)  Legislation  for  the  regulation  of  interstate  commerce  can  best 
be  enforced  by  a  national  commission. 


102  INTERSTATE    COMMERCE. 


NEW  YOEK  STOCK  AND  PETEOLEUM  EXCHANGE. 

Statement  by  T.  L.  Watson  and  John  F.  Zebley,  designated  to  represent  the 
Consolidated  Stock  and  Petroleum  Exchange  of  New  York. 

(1)  It  is  our  opinion  that  the  best  means  to  prevent  the  practice  of 
extortion  and  unjust  discrimination  by  corporations  engaged  in  inter- 
state commerce  is  to  establish  a  United  States  railroad  commission  with 
full  powers,  or  to  establish  a  court  of  appeals  similar  to  the  present  Court 
of  Claims. 

(2)  We  regard  the  present  rates  as  being  fair  as  far  as  through  traffic 
is  concerned,  but  think  that  the  local  rates  are  too  high. 

(3)  The  public  are  entitled  to  know  what  the  rates  are,  and  all  ar- 
ticles for  transportation  should  be  classified,  an$  shippers  should  be 
furnished  with  rates  from  which  there  should  be  no  deviation. 

(4)  We  regard  it  advisable  that  there  should  be  a  system  of  maximum 
and  minimum  rates. 

(5)  The  elements  of  cost  should  not  be  considered  in  establishing 
rates,  for  the  reason  that  a  common  carrier  should  regulate  their  affairs 
the  same  as  other  businesses  do  by  the  laws  of  supply  and  demand. 

(6)  Rebates  and  drawbacks  should  be  prohibited  by  law. 

(7)  The  system  of  pooling  contracts  and  agreements  is  not  in  accord 
with  strict  business  principles  and  should  be  prohibited  by  law. 

(8)  Shippers  should  by  all  means  be  entitled  to  say  by  what  line 
their  goods  should  be  forwarded,  and  should  be  protected  in  this  right. 

(9)  Uniformity  of  rates  can  best  be  secured  by  proper  legislation. 

(10)  Corporations  should  be  allowed  to  charge  a  lower  rate  for  long 
hauls  than  for  short  ones.    This  is  a  matter  that  will,  in  our  judgment, 
regulate  itself. 

(11)  Concessions  to  large  shippers  should  be  permitted,  but  should 
not  be  made  public. 

(12)  Corporations  should  be  required  by  law  to  adopt  a  uniform  sys- 
tem of  accounts. 

(13)  It  is  desirable  that  corporations  should  be  required  by  law  to 
make  semi-annual  reports  to  the  Government,  which  report  should  be 
sworn  to  by  the  president  and  at  least  three  directors.    They  should 
state  the  gross  earnings  and  expenses,  and  they  should  not  be  allowed 
to  charge  expenditures  for  renewals  and  repairs  as  being  construction. 
These  items  should  be  charged  off  as  a  portion  of  the  expense  of  oper- 
ating the  road. 

(14)  It  is  important  and  desirable  that  the  Government  should  de- 
velop and  maintain  the  water-ways,  as  there  is  a  great  deal  of  what  is 
known  as  "  slow  freight"  that  can  be  forwarded  much  cheaper  by  water 
than  by  rail. 

(15)  A  commission  should  be  established  of  not  less  than  five,  two  of 
whom  should  be  practical  railroad  men,  two  to  represent  shippers,  and 
one  selected  as  the  legal  representative  of  the  commission.    The  com- 
mission should  have  full  power  to  compel  the  attendance  of  all  persons, 
and  an  appeal  from  their  final  decision  should  be  subject  to  review  by 
the  Supreme  Court  of  the  United  States. 


INTERSTATE    COMMERCE.  103 

E.  W.  BAKEE'S  STATEMENT. 

Statement  of  B.  W.  Baker,  secretary  Board  of  Trade,  Duluth,  Minn. 

The  object  aimed  at  in  the  committee's  investigation  is  of  paramount 
interest  to  the  great  majority  of  business  men  of  this  country,  but,  like 
many  other  matters  of  vital  importance  to  all,  individuals  will  not  give 
their  time  to  bring  about  results,  while  they  are  loud  in  condemning 
public  servants  for  not  adopting  legal  measures  which  they  will  not 
even  sacrifice  their  time  to  assist  in  framing,  and  then  complain  of  ex- 
tortion and  monopolies. 

I  think  rebates  should  be  allowed,  to  the  end  that  the  same  principle 
involved  between  the  wholesale  and  retail  dealer  should  be  recognized, 
unless  a  sliding  scal^of  rates  can  be  adopted  and  maintained,  giving 
certain  rates  for  10,  25,  50,  100,  500  cars,  &c.  I  think  they  should  not 
be  regulated  by  law,  as  it  is  a  private  business  matter  between  the 
shipper  and  the  transporter.  They  should  not  be  prohibited. 

Pooling  should  be  allowed  under  certain  restrictions  for  the  protection 
of  the  railroads,  but  not  in  such  a  manner  as  to  give  them  arbitrary  con- 
trol of  the  shipper's  property,  utterly  disregarding  his  directions  as  to 
route,  time,  &c.  If -regulated  by  law,  it  would  be  sufficient  to  require 
the  terms  to  be  made  public  and  subject  to  approval. 

I  am  most  decidedly  of  the  opinion  that  provision  should  be  made  by 
law  for  securing  to  shippers  the  right  to  select  the  lines  over  which  their 
shipments  shall  be  carried. 

Eailroads  should  be  permitted  to  charge  less  proportionate  rates  for 
long  than  short  hauls,  as  it  costs  less.  I  do  not  think  the  public  inter- 
est requires  any  legislation  on  this  subject. 

I  believe  it  to  be  a  matter  of  great  national  importance  that  the  Gov- 
ernment should  develop  and  maintain  a  system  of  water  routes ;  that 
it  means  hundreds  of  millions  of  dollars  increased  wealth  to  the  agri- 
culturists of  the  West. 

A  commission  is  essential  to  the  carrying  out  of  laws  regulating  inter- 
state commerce. 


THE  PEOEIA  BOAED  OF  TEADE. 

Statement  by  the  transportation  committee  of  the  Board  of  Trade  of 
Peoria,  III.,  J.  B.  GreenAut,  J.  M.  Quinn,  and  E.  S.  Easton,  adopted  by 
the  board. 

(1)  The  best  method  of  preventing  extortion  and  discrimination  is  by 
means  of  stringent  laws  passed  by  Congress. 

(2)  As  a  rule  through  rates  are  too  low  and  local  rates  too  high. 

(3)  Publicity  of  rates  should  be  required  by  law.    Changes  of  rates 
without  public  notice  should  most  certainly  be  prohibited.     The  best 
method  of  securing  uniformity  and  stability  of  rates  is  through  a  com- 
petent commission  sustained  by  adequate  laws  of  Congress. 

(4)  We  think  it  advisable  to  enact  a  law  fixing  a  maximum  rate. 

(5)  In  fixing  the  tariffs  the  actual  cost  of  building  and  operating  of 
road  for  a  term  of  years,  with  interest  and  a  fair  remuneration  for  risk 
of  the  business,  should  be  considered. 

(6)  Eebates  and  drawbacks  should  be  subject  to  official  inspection. 


104  INTERSTATE    COMMERCE. 

(7)  Eailroads  should  not  be  allowed  to  pool  against  the  interests  of 
shippers. 

(8)  The  shipper  should  be  allowed  within  reason  to  select  the  line 
where  two  or  more  Hues  make  the  same  delivery. 

(9)  Uniformity  of  rates  can  be  best  secured  by  good  and  sufficient 
laws  passed  by  Congress,  with  honest  and  efficient  officers  to  enforce 
them  who  will  not  be  dependent  on  the  railroads  for  pay  or  position. 

(10)  Eailroads  should  be  allowed  to  charge  lower  rates  for  long  than 
for  short  hauls.     Legislation  on  this  subject  is  badly  needed,  but  should 
be  carefully  guarded  not  to  destroy  what  we  would  protect. 

(11)  There  should  be  no  difference  in  the  rates  allowed  to  shippers 
when  the  same  amount  of  freight  is  handled  and  the  conditions  are  the 
same. 

(12)  The  railroads  should  be  required  to  adopt  a  uniform  system  of 
accounts.  . 

(13)  They  should  be  required  to  make  reports  to  the  Government  as 
full  and  complete  as  possible. 

(14)  In  making  provision  for  securing  cheap  transportation  the  Gov- 
ernment should  develop  and  maintain  the  water  routes. 

(15)  There  should  be  a  commission  appointed  for  the  purpose  of  en- 
forcing any  laws  Congress  may  enact  for  the  regulation  of  interstate 
commerce. 


THE  MANUFACTURING  JEWBLEES. 

Statement  submitted  by  Aaron  Carter,  George  R.  Howe,  Henry  Hayes, 
David  C.  Dodge,  jr.,  and  David  F.  Conover,  of  New  York,  a  committee 
representing  the  interests  of  manufacturing  jewelers  and  wholesale 
dealers  in  watches  and  jewelry. 

In  some  of  the  States  (more  particularly  the  Southern)  there  are  local 
licenses  issued  to  peddlers  selling  goods  to  consumers  in  the  respective 
States.  We  doubt  whether  the  laws  providing  for  these  licenses  ever 
intended  that  they  should  be  applied  to  wholesale  merchants  as  at 
present  applied,  and  usually  on  information  of  irresponsible  parties  who 
manage  to  obtain  part  of  a  precarious  living  by  causing  the  arrest  of 
our  agents,  in  order  to  procure  a  portion  of  tbe  fine  involved. 

Our  traveling  agents  carry  with  them  a  complete  stock  of  goods  from 
which  they  deliver  to  the  store-keeper  such  as  he  may  select,  with 
invoice  for  the  same  j  not  selling  by  sample's  as  is  done  in  most  other 
businesses.  As  we  do  not  sell  to  the  consumer,  we  of  course  do  not 
interfere  with  the  business  of  local  merchants,  but  on  the  contrary,  we 
enable  these  merchants  to  obtain  the  full  benefit  of  ample  competition, 
which  we  think  is  decidedly  advantageous  to  the  whole  population  of 
the  States.  These  benefits  they  cannot  obtain  if  we  are  hampered  in 
the  facilities  of  traveling  from  State  to  State.  We  believe  that  there 
will  be  but  slight  difficulty,  if  any,  in  having  these  laws  amended  so 
that  they  will  apply  to  us  precisely  as  they  would  apply  to  their  own 
wholesale  merchants ;  placing  us  on  a  par  with  such  merchants. 

Another  feature  of  interference  with  free  interstate  commerce  affect- 
ing us,  is  the  refusal  of  certain  railroads  to  carry  our  trunks  as  baggage 
on  the  passenger  trains  which  also  carry  the  custodians  of  these  trunks. 
We  appreciate  the  claim  of  the  railroads  that  they  decline  as  a  matter 
of  security  to  carry  merchandise  as  baggage,  but  we  merely  ask  that 


INTERSTATE    COMMERCE.  105 

the  same  protection  should  be  given  to  our  baggage  as  is  given  to  ordi- 
nary baggage,  and  that  unjust  discrimination  should  not  be  made 
against  us ;  for  we  are  perfectly  willing  to  guarantee  (with  good  secur- 
ity) the  railroads  against  any  loss  that  may  occur  which  would  involve 
an  amount  greater  than  would  be  sustained  by  the  loss  of  an  ordinary 
wardrobe.  This  not  only  hampers  our  business,  but  prevents  the  un- 
fettered competition  in  our  goods  which  would  be  beneficial  to  all  the 
people  of  the  States,  as  indicated  in  a  prior  section  of  this  paper. 


THE  ANTI-MONOPOLY  LEAGUE. 

Statement  by  Walter  B^  Sharpe,  John  W.  Greene,  Wilson  McDonald,  John 
W.  Keough,  and  William  L.  Snyder,  committee  of  the  anti-monopoly 
league  of  New  York. 

Attested  as  follows : 

At  a  regular  meeting  of  the  anti-monopoly  league,  held  on  July  2,  1885,  the  fol- 
lowing statement,  prepared  by  a  committee  heretofore  appointed  so  to  do,  was 
unanimously  adopted  and  approved  as  the  view  of  this  body  upon  the  subject  of 
interstate  commerce,  and  upon  motion  it  was 

Resolved,  That  a  copy  of  the  same  be  placed  before  the  United  States  Senate  Com- 
mittee on  Interstate  Commerce  for  its  consideration. 

JAMES  J.  CONDON, 

Secretary. 
46  East  Twenty-sixth  street,  New  Torh. 

INTERSTATE   COMMERCE. 

The  interstate  commerce  of  the  country  is  carried  on  by  means  of  its 
interstate  postal,  telegraph,  waterway,  express,  and  railroad  systems, 
all  subject  to  legal  control  in  the  public  interest. 

THE   POSTAL   SYSTEM. 

The  postal  system  is  created  and  controlled  by  enactment  of  Con- 
gress, and  is  managed  as  one  would  manage  it  if  he  owned  the  whole 
country,  and  all  the  people  therein  were  his  tenants  whose  immediate 
happiness  and  whose  greatest  good  he  honestly  desired  to  secure.  It 
is  managed  with  a  view  to  find  out  how  much  service  can  be  yielded  to 
the  public  for  $1  without  loss. 

There  are  over  fifty  thousand  post-offices  in  the  country  and  each  now 
delivers  matter  at  a  uniform  rate.  A  company  made  up  of  five  thou- 
sand selected  from  these  post-offices  would  make  an  unreasonable  profit 
out  of  the  business  done  by  them  at  present  rates,  while  a  company 
representing  the  remaining  forty-five  thousand  offices  would  become 
bankrupt  at  the  same  rates  of  charge.  The  good  of  the  whole  is  best 
secured  by  equating  the  deficiency  of  the  feeble  with  the  surplus  of 
the  strong.  This  is  only  possible  under  one  ownership,  and  experience 
has  proved  that  that  ownership  can  only  be  safely  vested  in  the  Gov- 
ernment, because  it  aims  at  highest  service  without  profit. 

THE   TELEGRAPH   SYSTEM. 

In  its  office  the  telegraph  system  is  similar  to,  while  in  its  nature  it 
is  different  from,  the  postal  system.  Its  management  should  be  upon 
the  same  principle,  i.  e.,  with  a  view  to  determine  how  great  a  service 


106  INTERSTATE    COMMERCE. 

can  be  rendered  for  $1,  not,  as  it  is  now  managed,  with  a  view  to  de 
tenniue  how  little  service  the  public  will  accept  for  $1,  or  how  much  a 
sender  will  pay  rather  than  not  use  the  facility.  On'e  policy  determines 
how  much  the  traffic  will  bear,  the  other  how  little  it  is  necessary  to 
bear  the  traffic. 

Under  Government  control  on  this  principle  a  rate  of  one  cent  a  word 
for  ten  or  more  words  for  any  distance  could  easily  be  furnished,  and 
the  benefaction  of  this  great  facility  brought  down  to  the  reach  and  use 
of  thousands,  which  is  now  limited  to  hundreds. 

WATERWAYS. 

It  is  found  that  those  of  its  waterways  which  are  sustained  at  public 
expense  and  open  to  common  use  free,  yield  the  most  satisfactory  re- 
sults, and  the  steady  gravitation  in  this  and  all  countries  is  to  such 
free  use. 

The  waterways  furnish  the  cheapest  rate,  and  affect  and  regulate 
railway  rates  most  favorably  in  the  interest  of  the  shipper,  and  being 
open  on  common  terms  to  all  who  choose  to  use  them  need  no  other 
legislation  than  will  make  them  free  and  secure  access  to  them  to  all 
users  alike;  it  is  necessary  that  sufficient  landings  should  be  accessible 
to  all  upon  the  same  and  reasonable  practicable  conditions. 

A  syndicate  representing  private  interests  owning  and  controlling 
the  landings  on  the  Hudson  River  would  virtually  own  and  commerci- 
ally control  that  artery  of  trade.  This  should  be  prevented ;  no  exclu- 
sive landing  privileges  should  be  allowed  at  any  shipping  point. 

Where  public  landings  accessible  to  all  comers  on  equal  footing  and 
private  landings  inaccessible  to  the  public  at  large  cannot  co-exist,  the 
private  interest  should  give  way  to  the  public  need,  and  that  need  be 
amply  provided  for  and  fully  protected. 

A  monopoly  in  whole  or  in  part  of  any  natural  highway  is  unjust. 

RAILWAYS. 

There  are  in  the  United  States  125,000  miles  of  railways,  of  which  but 
30,000  miles  pay  dividends  to  stockholders.  The  traffic  which  produces 
the  revenues  of  the  railway  is  of  several  classes :  1st,  Passenger ;  2d, 
postal  freight;  3d,  express  freight;  4th,  dispatch  freight;  5th,  common 
freght. 

PASSENGERS. 

The  through  lines  between  New  York  and  Chicago  charge  as  a  rule 
at  the  rate  of  $320  per  ton  for  passengers  in  an  ordinary  car  and  $400 
per  ton  in  a  sleeping  car,  while  common  freight  is  carried  by  the  same 
roads  at  $5  to  $8  per  ton.  This  difference  is  unjust  to  passenger  traffic 
and  represses  it.  At  1  cent  a  mile  the  same  train  would  in  the  end  earn 
more  dollars  than  at  2  cents. 

POSTAL  FREIGHT. 

The  rate  paid  for  postal  freight  carried  on  the  same  train  and  car- 
ried in  the  same  car  as  express  freight  pays  much  higher  rates  per  ton 
than  is  collected  upon  express  freight  per  ton. 

EXPRESS  AND  DISPATCH  FREIGHT. 

As  a  mle  these  two  classes  of  freight  pay  too  little  per  ton  to  the  car- 
rying railway  and  extort  too  much  from  the  public,  while  the  difference 


INTERSTATE    COMMERCE.  107 

is  appropriated  by  intervening  corporations,  which  by  contract  with  the 
carrying  companies  monopolize  it  and  enforce  unjust  rates  arbitrarily. 


THE  PROFITS. 

If  the  profits  absorbed  by  the  intervening  corporations  which  prey 
upon  the  railway  and  traveling  and  shipping  public  alike  were  added 
to  the  railway  receipts  the  30,000  miles  which  now  pay  dividends  would 
yield  returns  beyond  reason,  while  70,000  miles  more  would  pay  reason- 
ably, and  all  would  pay  something. 

PHYSICAL,  GEOGRAPHY. 

The  physical  geography  of  the  country  gives  to  the  route  used  by  the 
New  York  Central  to  Chicago  so  great  advantages  over  all  other  roads 
in  grades  and  natural  development  of  local  traffic  that  it  can  earn  and 
pay  a  dividend  upon  a  charge  for  passenger  and  freight  traffic  that  will 
impoverish  any  rival  charging  the  same  rates. 

How  then  can  passenger  and  freight  rates  be  fixed  and  made  common 
to  all  roads  under  various  ownership,  except  they  be  crushing  to  the 
major  part  of  the  railroads  or  be  extortionate  to  the  public  and  uncon- 
scionably profitable  to  such  situated  as  the  New  York  Central  Com- 
pany ! 

What  legislation  can  cure  this  evil,  which  no  commercial  device  or 
pool  can  eradicate  I 

COMPETITION  AND  CONSOLIDATION. 

Competition  and  consolidation  can  do  and  have  done  much  to  facili- 
tate transit  and  reduce  charges,  but  in  the  last  analysis  of  the  question 
of  rates  it  is  found  that  grades  and  natural  costless  advantages  are  fac- 
tors that  nothing  can  overcome  except  the  application  of  the  principle 
adopted  in  the  conduct  of  the  postal  system  under  one  ownership  aim- 
ing at  the  greatest  public  good  without  profits. 

There  can  be  no  other  "remedy. 

Let  the  whole  system  of  interstate  commerce  by  postal,  telegraph, 
express,  water,  and  railways  be  organized  and  conducted  as  a  system  of 
national  public  works.  Make  waterways  free,  and  conduct  all  the  rest 
upon  the  same  principle  as  under  the  authority  of  Congress  the  postal 
service  is  now  conducted. 

Let  the  Government  assert  its  right  of  eminent  domain,  condemn  and 
convert  to  public  use  every  mile  of  interstate  railroad  and  telegraph 
line  in  the  country,  pay  for  the  property  at  its  ascertained  actual  value, 
and  in  the  use  thereof  for  the  public  good  practice  every  possible 
economy,  aim  at  the  most  complete  service,  seeking  no  profits  while 
reasonably  guarding  against  loss  in  transporting  common  and  express 
freight,  rendering  transit  with  facility,  safety,  and  comfort,  and  in  the 
transmission  of  information. 

This  done,  it  will  become  practicable  to  do  the  interstate  postal,  tele- 
graph, passenger,  express,  and  freight  business  of  the  country  with  the 
greatest  dispatch  and  economy,  and  to  reach  and  establish  general 
average  rates  for  all  such  service  as  shall  be  uniform,  permanent,  and 
just,  and  furnish  the  greatest  attainable  facility,  stability,  and  utility 
in  the  management  of  these  great  engines  of  education  and  civilization 
in  their  adaptation  to  the  wants  and  comforts  of  man. 

The  inevitable  is  that  a  monster  corporation  will  succeed  the  present 


108  INTERSTATE    COMMERCE. 

chaotic  and  commerce  disturbing  and  repressing  condition,  or  that 
Government  control  must  occur. 

The  former  would  be  inimical  to  public  interest  and  dangerous  to 
our  free  institutions. 

The  latter  will  best  conserve  every  desirable  social  condition,  and  its 
consummation  is  the  earnest  hope  of  the  patroit,  philanthropist,  and 
statesman. 


J.  J.  WOODMAN'S  STATEMENT. 

Statement  of  J.  J.  Woodman,  Paw  Paic,  Mich.,  master  of  tlie  National 
Orange  of  the  Patrons  of  Husbandry. 

Eeferring  to  your  circular  of  April  10,  now  before  me,  I  will  briefly 
state  not  only  what  I  understand  to  be  for  the  interest  of  agriculture 
but  what  I  believe  to  be  for  the  public  good. 

(1)  The  best  and  only  practical  method  of  "  preventing  extortion  and 
unjust  discrimination  by  corporations  engaged  in  interstate  commerce," 
in  my  judgment,  is  to  enact  a  national  law,  clearly  defined,  and  protect- 
ing alike  the  interests  of  the  people  and  of  the  railroads. 

(2)  The  law  should  aim,  as  far  as  practicable  (with  the  aid  of  State 
legislation),  to  establish  reasonable  rates,  both  for  "  local  and  through 
traffic,"  and  thereby  prevent  the  unequal  and  unjust  discrimination  now 
practiced  of  charging  for  local  traffic  "  whatever  the  article  will  bear," 
and  for  through  traffic  whatever  the  avariciousness  of  railroad  managers 
through  the  pooling  system  demands  ;  also  to  prevent  unjust  discrimi- 
nation between  individuals  and  localities  in  shipping. 

(3)  "  Publicity  of  rates  "  should  be  required  by  law,  and  no  changes 
should  be  made  from  the  published  rates  until  after  at  least  thirty  days' 
notice  of  the  same. 

(4)  Eeasonable  "  maximum"  rates  for  the  transportation  of  both  local 
and  through  freights  should  be  established,  leaving  competition  to  take 
place  under  such  rates  ;  and  if  no  unjust  discrimination  is  allowed  be- 
tween persons  and  localities  justice  will  be  secured  and  extortion  abol- 
ished. 

(5)  In  fixing  maximum  rates,  the  actual  cost  of  construction,  or  bona 
fide  capital  invested,  together  with  amount  and  "  condition  of  business," 
should  be  well  considered.    Arbitrarily  taxing  the  people  to  pay  divi- 
dends upon  fictitious  or  watered  stock  is  a  system  of  extortion  and 
robbery  too  palpable  to  be  concealed  or  palliated,  too  contradictory  to  the 
principles  of  our  Government  to  be  permitted,  and  too  oppressive  and 
humiliating  to  an  enlightened  people  to  be  endured. 

(6)  The  present   system  of  "rebates   and  drawbacks"  should   be 
abolished.    It  is  a  system  of  favoritism  which  enriches  one  company  or 
individual  at  the  expense  of  another.    The  transaction  between  the 
Pennsylvania  Railroad  and  the  Standard  Oil  Company ,  by  which  thelatter 
received  rebates  amounting  to  $10,000,000  in  eighteen  months,  breaking 
up  seventy-nine  other  houses  engaged  in  the  same  business,  is  sufficient 
proof  of  the  above.     This  system  enables  speculators  in  farm  products 
who  have  influence  with  the  companies  to  obtain  lower  rates  than  are 
given  to  farmers.    By  this  advantage  in  shipping  they  are  enabled  to 
buy  and  manipulate  most  of  the  surplus  farm  products.     This  is  seri- 
ously detrimental  to  the  farmer.     It  not  only  reduces  his  profits,  but 
deprives  him  of  the  satisfaction  and  valuable  business  experience  which 
shipping  and  marketing  his  own  products  would  give  him.    As  agricult- 


INTERSTATE   COMMERCE.  109 

ure  is  the  basis  of  all  prosperity,  and  from  which  the  nation  draws  its 
very  lite-blood  of  existence,  the  farmer  should  have  access  to  a  free  and 
untrammeled  market,  without  being  compelled  to  pay  tribute  to  specu- 
lators and  gamblers  in  the  products  of  his  labors. 

(7)  The  system  of  "  pooling  contracts  and  agreements  between  rail- 
roads doing  an  interstate  business  "  destroys  all  healthy  competition 
in  transporting  freight,  compels  unwilling  partnership,  and  enables  the 
contracting  parties  to  i-uin  weaker  and  outside  lines  whenever  it  may 
serve  their  interest  to   do  so.     The  system   should  be  abolished  and 
prohibited. 

(8)  Provision  should  be  made  by  law  for  securing  to  shippers  not 
only  "  the  right  to  select  the  lines  and  parts  of  lines  over  which  their 
shipments  shall  be  transported, "  but  to  insure  to  them  good  and  suit- 
able cars  for  the  same. 

(9)  As  passengers  get  on  and  off'  the  cars  without  expense  to  the 
company,  and  as  ticket  agents  and  conductors  must  be  employed,  it 
seems  reasonable  to  infer  that  "companies  engaged  in  interstate  com- 
merce "  should  carry  passengers  at  one  uniform  rate  per  mile.    I  am 
somewhat  inclined  to  the  opinion  that  if  the  rates  upon  all  railroads  m 
the  country  were  limited  by  law  to  3  cents  per  mile  for  "  first  class," 
2  cents  for  "  second  class,"  and  1  cent  for  "  third  class,"  and  the  com- 
panies were  compelled  to  carry  at  these  rates,  it  would  not  only  stim- 
ulate travel,  but  result  in  benefit  to  the  people  and  the  companies.    This 
is  the  European  system,  and  enables  the  poorer  classes  to  travel  with- 
out serious  embarrassment. 

(10)  "  Corporations  engaged  in  interstate  commerce"  should  be  per- 
mitted to  charge  an  excess  for  a  short  over  a  long  haul  equal  to  the  ad- 
ditional cost  of  loading  and  unloading  cars,  stopping  trains,  and  switch- 
ing ;  but  they  should  not  be  permitted  to  charge  more  for  a  short  than 
for  a  long  haul.    To  illustrate,  the  rates  from  a  station  between  Chi- 
cago and  New  York  to  New  York  should  not  be  more  than  from  Chi- 
cago.   This  practice  by  the  companies  is  a  just  and  fruitful  cause  of 
complaint. 

(11)  No  concession  should  be  allowed  to  large  shippers,  "except  such 
as  represent  the  actual  difference  in  the  expense  of  handling  large  ship- 
ments over  small  shipments,"  and  this  should  be  confined  to  freight 
which  passes  through  private  'warehouses,  elevators,  and  stock-yards, 
and  the  difference  should  be  made  known  to  the  public. 

(12)  A  uniform  system  of  accounts  should  be  kept  by  all  companies 
engaged  in  interstate  commerce. 

(13)  They  should  also  be  required  to  report  annually  to  the  Govern- 
ment: (1)  Number  of  miles  of  road  operated  ;  (2)  actual  cost  of  the  same ; 
(3)  value  of  rolling  stock ;  (4)  indebtedness,  bonded  and  otherwise;  (5) 
amount  paid  for  repairs  during  the  year;  (G)  amount  paid  for  rolling- 
stock  duriug  the  year;  (7)  cost  of  operating;  (8)  net  profit  or  loss,  as 
the  result  may  show ;  (9)  number  and  amount  of  dividends  declared, 
during  the  year;  (10)  amount  paid  as  dividends  or  otherwise  on  ficti- 
tious capital  stock,  if  any. 

(14)  Water  routes  are  nature's  great  thoroughfares,  and  it  should  be 
a  fixed  policy  of  the  Government  to  keep  the  channels  of  these  great  ar- 
teries open,  that  the  life  blood  of  commerce  may  flow  freely.    Water 
routes  are  indispensable  in  maintaining  cheap  transportation. 

(15)  The  people  want  no  board  of  railroad  commissioners.    They  want 
just  and  wholesome  laws,  with  well-defined  provisions  for  enforcing 
them.     Several  of  the  States  have  created  "commissions,"  but  with 
unsatisfactory  results.    The  people  prefer  to  trust  the  courts  rather 
than  a  commission. 


110  INTERSTATE    COMMERCE. 


CYKUS  G.  LUCE'S  STATEMENT. 

Statement  of  Cyrus  G.  Luce,  of  Gilead,  master  of  the  Michigan  State 

Grange. 

I  frankly  confess  that  the  subject  is  too  vast  and  complicated  for  me 
to  master.  But  for  the  general  good  of  the  people,  and  the  railroads, 
too,  it  seems  to  me  essential  that  the  Government  should  in  some  way 
exercise  control  over  them. 

(1)  I  can  hardly  imagine  a  case  where  it  would  be  right  or  proper  for 
a  railroad  to  charge  more  for  ;•  shorter  than  for  a  longer  distance  for 
fr«  ight  like  in  kind  and  quantity  and  over  the  same  road  or  roads.     The 
public  believe  this  to  be  wrong,' and  will  not  be  content  while  the  prac- 
tice exists.     This  the  law  should  prohibit.     The  car-load  should  be  the 
basis  for  charges,  and  all  discriminations  between  places  or  individuals 
should  be  prohibited.     Of  course  I  do  not  claim  that  the  rate  should  be 
the  same  on  all  roads,  nor  the  same  per  mile  for  a  short  as  for  a  long 
haul. 

(2)  The  through  rates  are  very  low,  or  local  very  high.     This  is  es- 
pecially true  at  non-competing  points.     But  my  answer  to  the  first  ques- 
tion will  afford  a  remedy  for  a  part  of  this  wrong. 

(3)  Publicity  of  rates  is  essential  and  should  be  required  of  all  roads. 
Imaginary  wrongs  are  often  hard  to  be  borne,  and  I  doubt  not  some  of 
the  complaints  are  founded  upon  imagination.     Publicity  of  rates  would 
remove  some  of  this. 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  mini- 
mum rates  is  the  hardest  question  of  all,  and  the  deponent  saith  not. 

(5)  The  elements  of  cost  of  roads,  as  well  as  the  facilities  for  earning 
money  on  the  part  of  the  roads,  should  be  taken  into  consideration  and 
should  all  have  their  influence  if  rates  are  fixed  by  law.     But  the  real 
cost  (and  not  watered  stock)  should  be  estimated. 

(6)  Kebates  and  drawbacks  should  never  be  allowed.     Here  is  where 
some  of  the  greatest  abuses  exist.    One  place  is  built  up,  another  torn 
down ;  one  man  is  made  rich,  another  poor,  through  this  system  of 
rebates.     It  ought  to  be  prohibited  now,  henceforth,  and  forever. 

(7)  Pooling  may  safely  be  permitted  if  the  Government  will  exercise 
official  control  over  it  so  as  to  insure  justice  and  equality. 

(8)  It  seems  to  me  that  shippers  should  enjoy  the  right  to  select  the 
lines  over  which  their  shipments  shall  be  transported,  yet  I  cannot  re- 
gard this  as  essential  if  they  are  justly  and  promptly  served. 

(9)  The  question  of  securing  uniformity  of  rates,  like  the  fourth  ques- 
tion, is  a  little  too  weighty  for  me.     The  cost  and  business  of  roads 
differ  so  much  that  an  iron  rate  or  rule  cannot  be  adopted  that  will  do 
justice  to  all.     If  a  commission  of  constituted  authority  can  be  found 
wise  enough,  broad  enough,  just  enough,  and  bold  enough  to  do  justice 
to  all,  it  might  be  placed  in  its  hands  to  decide  and  enforce.     But  the  if 
forms  an  important  part  of  this  consideration.     But  observation  weak- 
ens confidence  in  a  commission  to  settle  the  vexed  questions.     Maximum 
rates  may  be  adopted  that  would  in  some  cases  prevent  extortionate 
rates. 

(10)  Corporations  engaged  in  interstate  commerce  should  certainly 
be  permitted  to  charge  a  lower  proportionate  rate  for  a  long  than  for  a 
short  haul,  but  never  more  for  a  shorter  than  for  a  longer  haul. 

(11)  "  Should  any  concessions  in  rates  be  allowed  to  large  shippers," 
&c.  f    No,  no,  no! 


INTERSTATE    COMMERCE.  Ill 

(13)  Corporations  engaged  in  interstate  commerce  should  be  required 
to  make  a  statement  to  the  Government  of  the  actual  cost  of  their 
roads,  gross  and  net  income,  and  the  sources  from  which  it  is  derived, 
and  of  the  various  items  of  expenses.     Such  official  reports  are  a  source 
of  great  satisfaction  to  the  public.     They  often  correct  the  imagination. 

(14)  The  Government  should  at  least  encourage  by  liberal  appropria- 
tions the  maintenance  of  water  courses  to  the  sea-board.     Tills  is  of 
prime  importance.     With  these  a  competition  will  exist  that  will  do 
much  toward  regulating  the  charges. 

(15)  My  own  opinion  is  that  a  regulating  law  should  be  passed  re- 
stricting and  fixing  rates  so  far  as  possible  consistent  with  justice,  and 
that  then  a  tribunal  or  commission  should  be  established  to  enforce  the 
law ;  and  in  addition  to  this  it  should  be  clothed  with  discretionary 
power  to  enforce  necessary  rules  to  insure  the  desired  results. 

And  now  permit  me  to  say  that  the  assertion  of  the  right  to  legislate 
upon  the  very  important  question  of  interstate  commerce  by  the  Con- 
gress of  the  United  States  will  be  hailed  with  delight  by  the  great  mass 
of  the  American  people.  This  right  can  in  no  way  be  declared  so  effect- 
ively as  by  the  passage  of  a  bill  that  shall  regulate,  restrict,  or  control. 
The  passage  of  an  act  that  merely  provides  for  the  appointment  of  a 
commission  to  gather  and  publish  facts  and  reports  will  be  of  no  avail. 
To  afford  any  satisfaction,  this  commission  must  have  authority  to  act 
and  enforce. 

This  demand  does  not  come  from  the  hoodlums  or  communists,  but 
from  the  conservative,  candid  citizens.  It  is  quite  possible  that  this 
demand  comes  not  so  much  from  what  has  been  done  as  what  may  be 
done  while  a  few  men  are  in  position  to  exercise  such  unlimited  power. 

In  the  approaching  conflict  between  wealth  and  corporations  on  the 
one  side  and  poverty,  vice,  ignorance,  prejudice,  and  communism  on  the 
other,  the  Government  will  be  wise  to  pursue  such  a  course  as  will  com- 
mend itself  to  the  conservative  average  citizen. 


W.  H.  NELSON'S  STATEMENT. 

Statement  of  W.  H.  Nelson,  of  White  Haven,  master  of  the  Tennessee  State 

Grange. 

That  there  is  pressing  necessity  for  legislation  by  Congress  on  the 
subject  of  interstate  commerce  seems  evident  from  the  clashing  of  in- 
terests which  occurs  almost  daily  in  the  courts,  as  a  result  of  attempted 
State  supervision  of  transportation  lines  which  extend  beyond  State 
lines  or  merely  pass  through  to  terminal  points  beyond.  Perhaps  the 
worst  result  which  is  growing  out  of  these  conflicts  is  the  ill-feeling  and 
mistrust  engendered  by  what  seems  to  be— and  is  becoming  generally 
believed  to  be — a  determination  on  the  part  of  these  corporations  to 
resist  unitedly  all  attempts  at  supervision  and  to  defy  the  powers  of  the 
State.  As  farmers,  we  hope  that  this  is  more  apparent  than  real,  since 
agriculture  and  transportation  have  become  and  must  ever  remain  so 
dependent  on  each  other.  Another  very  grave  evil  which  is  growing 
out  of  delay  and  the  injustice  of  permitting  corporations  to  tax  at  will 
"what  the  traffic  will  bear"  is  the  increasing  disposition  among  the 
more  intelligent  and  independent  farmers  to  seek  other  employment  and 
to  leave  the  ignorant  and  stupid  to  cultivate  for  absent  owners.  This 


112  INTERSTATE    COMMERCE. 

tendency  is  operating  slowly,  but  surely,  at  the  present  time,  and  only 
needs  the  breaking  of  a  few  more  strands  in  the  cable  of  public  con- 
fidence to  precipitate  a  general  rush  from  the  farms. 

The  best  method  of  preventing  the  practice  of  extortion  and  unjust 
discrimination  by  corporations  engaged  in  interstate  commerce  will 
perhaps  be  most  profitably  found  by  tirst  determining  what  iuteiests 
stand  most  in  need  of  any  method  of  supervisory  legislation.  I  should 
say  without  hesitation  the  corporation  interest  stands  foremost  in  point 
of  need  in  this  respect.  A  large  proportion  of  them  are  confessedly  on 
the  verge  of  bankruptcy,  while  others  are  growing  so  strong  that  their 
unruly  greed,  like  the  blind  desperation  of  Samson,  is  threatening  to 
pull  clown  the  temple  of  State  upon  themselves  and  the  rest  of  us.  The 
poverty  of  the  one  class  is  to  be  found  in  the  wealth  of  the  other.  A 
system  of  fraud,  discrimination,  and  robbery  is  continually  practiced 
among  them,  and  the  morals  of  the  whole  nation  are  lowered  by  toler- 
ating s«ch  examples  in  high  places.  As  one  evidence  that  this  is  not 
too  strongly  stated  witness  the  fierce  wars,  which  are  only  suspended 
by  truce  at  cost  of  the  public  until  some  contracting  party  breaks  faith, 
when  hostilities  are  again  renewed. 

It  seems  to  me  that  a  remedy  can  be  found  only  in  a  rigid  code  of 
laws,  enacted  by  Congress  and  clearly  defining  their  relations  to  each 
other  and  to  Government  or  people,  and  prohibiting  every  known  prac- 
tice of  dishonesty  and  unfairness  in  their  dealings  with  each  other, 
with  heavy  penalties  for  violations,  including  forfeiture  of  charters  in 
case  of  repetitions.-  The  materials  for  such  a  code  could  perhaps  best 
be  obtained  from  the  records  of  the  courts  and  from  their  own  ample 
stores  of  experience.  But  one  clause  would  we  suggest  from  the  outside, 
viz,  a  total  prohibition  of  all  secrecy  and  privacy  of  transactions.  The 
interests  and  future  prosperity  of  these  corporations  require  that  this 
much  should  be  done  for  them,  and  they  are  of  too  much  importance  to 
the  rest  of  us,  and  especially  are  they  too  closely  allied  to  the  agricult- 
ural interests,  to  be  allowed  to  wreck  the  grand  system  of  transporta- 
tion which,  by  reason  of  its  magnitude,  has  become  the  wonder  of  the 
world.  We  have  dwelt  upon  this  part  of  the  subject  because  we  be- 
lieve that  we  have  hit  the  root  of  the  matter  and  proposed  a  condition 
precedent  without  which  other  legislation  will  give  but  little  promise. 
With  this  enacted,  however,  we  believe  that  the  problem  of  preventing 
extortion  and  unjust  discrimination  against  other  interests  will  be  more 
than  half  solved. 

In  considering  rates  now  charged  for  local  and  through  traffic  as  an 
aggregate  of  receipts,  we  have  no  accessible  statistics  upon  which  to 
base  a  conclusion  as  to  whether  they  are  reasonable  or  unreasonable, 
and  it  would  seem  that  in  order  to  prevent  such  a  conclusion  being 
reached  these  corporations  have  very  generally  adopted  the  culpable 
practice  known  as  "  stock  watering"  and  secrecy.  We  are  satisfied, 
however,  from  what  we  do  know  that  through  rates  in  many  cases  are 
too  low,  and  that  local  traffic  is  unjustly  taxed  to  make  up  the  deficit. 
This  would  probably  be  remedied  to  some  extent  by  establishing  a  sys- 
tem of  maximum  and  minimum  rates.  And  while  we  do  not  think  that 
the  public  interest  requires  the  prohibition  of  charging  a  lower  propor- 
tionate rate  for  a  long  haul  than  for  a  short  haul,  yet  we  believe  that  a 
higher  actual  charge  for  a  short  haul  than  for  a  longer  haul  should  bo 
prohibited.  This  feat  is  accomplished  in  this  section,  on  freight  con- 
signed to  a  way  station,  by  carrying  it  on  past  the  way  station  to  the 
end  of  the  road  at  through  rates,  when  it  is  returned  to  destination 
with  local  charges  for  the  lap-back. 


INTERSTATE    COMMERCE.  113 

We  think  that  rebates  and  concessions  in  rates,  except  such  as  repre- 
sent the  actual  difference  in  expense  of  handling  large  shipments  over 
small  shipments,  should  undoubtedly  be  prohibited  by  law.  We  also 
believe  that  a  wise  public  policy  demands  the  prohibition  of  pooling 
contracts,  at  least  for  the  present,  as  they  are  dangerous  and  in  danger- 
ous hands  so  long  as  thai}  unruly  and  defiant  spirit  is  so  clearly  mani- 
fested. While  we  are  firm  in  the  belief  that  the  cost  of  the  service, 
with  a  liberal  addition  for  profits  and  contingencies,  constitutes  the  true 
basis  for  determining  the  rates  which  should  be  charged  for  the  trans- 
portation of  freights  and  passengers,  yet  we  have  but  little  hope  of  ob- 
taining satisfactory  results  until  complete  publicity  of  all  transactions 
is  required  by  law  and  obtained.  Full  annual  reports  should  also  be 
required  to  be  made  and  sworn  to,  and  they  should  contain  : 

Xames  of  officers  and  directors,  with  residences ;  assets  and  liabili- 
ties ;  capital  stock ;  cost  of  construction  and  equipment;  earnings  and 
expenses;  description  of  property ;  number  of  employes ;  tonnage  car 
ried  ;  passengers  carried ;  accidents  and  stock  killed ;  free  passes  issued, 
and  to  whom  ;  by  whom  operated  ;  in  what  States  operated. 

Of  course  under  each  general  head  subdivisions  should  be  arranged 
so  as  to  bring  out  like  information  from  each  company.  Perhaps  other 
general  heads  might  be  added  with  advantage,  and  the  requiring  all 
companies  to  adopt  a  uniform  system  of  accounts  would  add  very  much 
to  the  accuracy  and  value  of  such  reports.  The  railway  system  is  con- 
tinually enlarging,  and  many,  if  not  all,  of  these  propositions  appear  as 
absolutely  necessary  when  viewed  with  reference  to  the  future  ;  but  even 
if  we  look  to  the  past  we  can  see  that  these  corporations  and  the  whole 
country  would  now  be  in  better  condition  if  such  laws  had  been  enacted 
years  ago.  The  country  is  likewise  growing  in  population,  with  vast 
resources  undeveloped,  and  certainly  all  the  water  routes  which  can  be 
opened  to  commerce  will  be  needed  and  will  exert  a  wholesome  influ- 
ence so  long  as  competition  can  be  maintained.  For  this  purpose  we 
believe  that  Congress  should  enact  laws  prohibiting  combinations  be- 
tween boats  lines  and  railways,  and  should  also  prohibit  the  ownership 
of  boat  lines  by  railroad  corporations.  Did  time  permit,  we  might  en- 
large upon  the  absolute  necessity  of  competition  not  only  as  a  protec- 
tion to  the  public  interests  but  for  the  continued  prosperity  of  the  cor- 
porations. We  are  not  unmindful  that  reductions  in  rates  have  been 
going  on  for  years  as  an  incident  of  the  times.  This  is  evident  from 
the  fact  that  freight  in  excess  of  the  local  demand  must  reach  the  sea- 
board at  prices  which  will  meet  the  foreign  demand  or  exportation  will 
cease.  So  that  during  short  crop  years  and  weak  foreign  demand  trans- 
portation companies  must  share  with  other  interests  a  financial  depres- 
sion ;  but  with  recurring  abundance  and  advancing  prices  abroad,  rates 
are  advanced  to  "all  the  traffic  will  bear,"  thus  reimbursing  for  the  past 
and  fortifying  for  the  future.  In  this  way  they  grasp  at  will  the  fruits 
of  the  sunshine  and  favoring  showers  and  stimulated  labor,  and  make 
all  seasons  alike  unpropitious  to  the  farmer.  And  through  the  farmer 
they  depress  every  other  interest  in  the  land,  including  their  own.  But 
these  attempts  to""  kill  the  goose  to  get  the  golden  egg,"  it  would  seem, 
should  not  be  tolerated  much  longer  by  the  American  goose. 

Much  has  been  said  against  commissions,  but  most  of  these  arguments 
might  be  turned  with  equal  propriety  against  any  public  trust  or  office. 
We  are  decidedly  in  favor  of  a  commission,  but  without  any  grant  of  ar- 
bitrary powers  to  militate  against  the  rights  or  interests  of  corporations. 
We  think  that  the  commission  should  have  power,  and  be  instructed,  to 
co-operate  with  State  commissions,  and  should  be  required  to  enforce 
16232  AP 8 


114  INTERSTATE    COMMERCE. 

the  laws  by  advisory  consultation,  if  possible,  but  through  the  courts  if 
necessary.  They  should  be  required  to  make  annual  reports,  giving  all 
official  correspondence  and  full  details  of  all  business  transacted.  Es- 
pecially should  the  commission  be  charged  with  the  duty  of  ferreting 
out  and  prosecuting  all  secret  transactions.  Let  us  have  no  secrecy  and 
all  real  causes  for  complaint  will  soon  be  removed,  and  complaint  with- 
out reason  will  soon  vanish  when  exposed  to  open  daylight. 

We  regret,  but  are  not  responsible  for,  the  very  general  belief  among 
railroad  men  that  the  order  of  Patrons  of  Husbandry  is  intent  on  injur- 
ing their  interests.  Kailroad  men  are  too  much  occupied  with  a  new 
and  complicated  business  to  mingle  with  farmers  and  learn  better,  and 
hence  they  fall  an  easy  prey  to  hungry  attorneys,  who  see  a  good  living 
in  exciting  their  fears  and  magnifying  mole-hills  into  mountains. 


E.  P.  BOISE'S  STATEMENT. 
Statement  by  JR.  P.  Boise,  of  Salem,  master  of  the  State  Grange  of  Oregon. 

This  matter  of  the  best  methods  to  be  adopted  by  Congress  to  regu- 
late interstate  commerce  on  railroads  has  for  some  years  attracted  the 
attention  of  farmers  in  this  State,  and  caused  considerable  discussion 
among  them.  They  believe  abuses  prejudicial  to  their  interests  exist  in 
railroad  management,  and  they  have  been  anxiously  looking  to  Con- 
gress and  the  State  legislature  for  relief.  This  subject  was  before  our 
State  legislature  at  its  last  session,  and  a  law  was  passed  by  that  body 
regulating  transportation  on  railroads  in  this  State,  which  received  the 
approval  and  influence  of  our  farmers  in  its  support.  This  law  is  in 
effect  the  Eeagan  bill,  which  was  considered  and  passed  by  the  House 
of  Representatives  of  the  last  Congress.  The  enactment  of  this  law  by 
our  legislature  by  a  very  decided  majority  expresses  more  emphatically 
than  I  can  the  earnest  desires  of  the  people  of  this  State,  for  1  believe 
three-fourths  of  the  people  favored  its  enactment.  The  passage  of  the 
Eeagan  bill  through  the  House  in  Congress  was  formally  approved  by 
our  legislature,  and  a  resolution  passed  both  houses  unanimously,  in- 
structing our  Senators  in  Congress  to  support  the  Eeagan  bill.  I  men- 
tion these  facts  to  show  to  your  committee  that  the  people  of  this  State 
favor  such  regulations  of  interstate  commerce  as  will  suppress  manifest 
abuses  by  forbidding  their  continuance  by  positive  laws  which  name  the 
abuses  and  provide  for  their  suppression. 

PUBLICITY  OF    HATES. 

In  your  third  interrogatory  you  speak  of  publicity  of  rates.  This  is 
very  desirable  here,  for  now  with  rates  unknown  shippers  can  make  no 
certain  calculations  as  to  the  value  or  price  to  be  paid  for  articles  they 
buy  or  sell  which  are  subject  to  railroad  transit.  Secret  rates  also  ex- 
pose shippers  to  impositions  by  dishonest  railroad  agents,  who  some- 
times wish  to  extort  for  private  gain.  So  also  where  a  railroad  company 
pretends  to  carry  goods  by  weight,  the  goods  should  be  weighed  and 
the  true  weight  ascertained,  and  not  left  to  be  guessed  at  by  station 
agents,  for  they  always  guess  against  the  shipper.  I  know  a  case  in 
point  where  a  man  shipped  a  buggy  by  rail  which  weighed  not  over  300 
pounds.  The  station  agent  guessed  its  weight  at  800  pounds,  and  collected 


INTERSTATE    COMMERCE.  115 

freight  at  that  rate.  I  know  of  other  similar  instances  of  this  kind  of 
extortion. 

No  rebates  should  be  allowed,  for  by  this  system  of  discrimination 
the  favorites  of  railroad  managers  are  assisted  in  business  at  the  ex- 
pense of  their  neighbors,  and  free  competition  in  business  destroyed. 
While  this  system  prevails  n<5  one  can  safely  enter  a  business  requiring 
large  shipments,  unless  he  first  secures  the  friendship  and  aid  of  rail- 
road managers.  All  persons  should  be  equal  so  far  as  the  law  can  make 
them. 

Railroad  corporations  should  make  annual  reports  to  the  Govern- 
ment, that  we  may  know  the  cost  of  construction,  their  earnings,  their 
liabilities  ;  whether  they  have  borrowed  money  to  pay  dividends  to  in- 
flate their  stocks,  so  that  persons  wishing  to  buy  or  sell  stocks  may  act 
intelligently ;  that  we  may  know  how  much  tax  they  ought  to  pay,  and 
that  we  may  have  that  information  relative  to  their  business  which  will 
enable  the  authorities  of  the  nation  and  States  to  act  intelligently  in 
making  laws  to  regulate  commerce  on  them.  This  kind  of  knowledge 
your  committee  seems  to  be  seeking  through  this  circular. 

THE   RAILROADS    DESTROYING    COMMERCE  BY  SEA. 

Again,  it  is  the  duty  of  Congress,  so  far  as  it  can  be  done  with  reason- 
able expense,  to  encourage  and  secure  cheap  transportation  by  water 
routes,  and  not  allow  the  railroads  to  so  discriminate  as  to  break  down 
or  dominate  the  business  on  these  waterways.  With  a  view  to  crip- 
pling if  not  destroying  the  carrying  trade  by  ship  from  the  Atlantic  to 
the  Pacific  coasts,  the  transcontinental  lines  have  put  down  through 
freights  from  Eastern  cities  to  San  Francisco,  and  Portland,  Oreg.,  and 
deliver  them  at  very  low  rates  by  special  contracts  to  shippers  who 
agree  and  bind  themselves  not  to  ship  any  goods  by  sea.  One  way  to 
prevent  the  destruction  of  this  cheap  waterway  is  to  forbid  the  charg- 
ing more  for  shorter  than  longer  hauls,  which  is  being  done.  Take  for 
example  coal  oil.  It  has  been  brought  from  Eastern  cities  by  the  North- 
ern Pacific  and  the  Oregon  Railway  and  Navigation  Company  to  Port- 
land for  $1  per  100  pounds,  while  more  than  double  that  amount  was 
being  charged  to  Spokane  Falls,  a  place  on  the  Northern  Pacific  more 
than  300  miles  east  of  Portland.  These  discriminations  are  intended 
to,  and  do  tend  to,  embarrass,  and  if  continued  may  destroy  our  com- 
merce by  sea  with  the  Atlantic  coast.  They  also  unjustly  tax  Eastern 
Oregon  and  Washington  without  any  recompense  to  the  people  of  that 
section. 

THE    IMPROVEMENT    OF   THE    COLUMBIA  RIVER. 

I  would  also  call  the  attention  of  your  committee  to  the  importance  of 
the  canal  and  locks  now  being  constructed  at  the  Cascades  of  the  Co- 
lumbia River.  Were  they  completed  (and  they  should  have  been  before 
this  time),  then  a  cheap  waterway  would  be  open  to  the  people  east  of 
the  Cascade  Mountains,  a  country  of  great  extent  and  vast  resources. 
The  Oregon  Railway  and  Navigation  Company  now  controls  this  great 
river  and  taxes  the  growing  commerce  of  its  great  interior  basin  at  will. 

Mr.  Henry  Villard,  who  founded  this  corporation,  and  at  one  time 
through  a' combination  with  it  and  other  corporations  monopolized  the 
entire  carrying  trade  of  this  North  west,  said  to  his  stockholders  that  the 
"  control  of  this  river  was  the  backbone  of  their  enterprise."  They  will 
not  willingly  surrender  their  power,  and  will,  if  they  can,  delay  the  comple- 
tion of  these  locks  so  they  may  continue  their  monopoly  and  gather  more 


116  INTERSTATE    COMMERCE. 

millions  from  the  people.  So  completely  is  the  business  of  the  Upper 
Columbia  region  in  the  control  of  this  monopoly  that  the  wool  clip  pro- 
duced there  last  year,  though  then  baled,  pressed,  and  ready  for  ship- 
ment to  Boston  and  other  Eastern  markets  by  way  of  the  Northern  Pa- 
cific, was  compelled  to  go  to  Portland  before  the  owners  could  get  a  bill 
of  lading  to  take  it  again  over  the  same  rOad  past  the  warehouses  where 
it  had  been  gathered  and  baled  on  its  way  east. 

These  wrongs  are  so  apparent  to  us  that  we  think  no  commission  or 
other  investigating  tribunal  is  now  needed  tofurtherpoint  them  out.  A 
commission  invested  with  powers  ever  so  comprehensive  should  not  be 
intrusted  to  right  these  wrongs.  If  we  have  a  commission  (and  one  may 
be  necessary  to  investigate  complaints  of  abuses  less  manifest)  l^t  its 
jurisdiction  extend  to  other  matters  which  may  be  equitably  adjusted, 
such  as  the  rates  to  be  charged  on  the  different  lines  where  elasticity 
in  charges  may  be  just.  But  positive  law  is  best  to  suppress  palpable 
•wrong.  The  action  of  the  lower  house  of  Congress  in  passing  the  Rea- 
gan bill  meets  the  approval  of  the  people  here.  It  seems  to  us  that  the 
United  States  Senate  should  not  be  slower  in  meeting  the  demands  of 
the  people,  as  expressed  through  their  representatives  freshly  chosen  by 
their  votes,  than  the  House  of  Lords  in  yielding  to  the  demands  of  the 
Commons  in  England. 


S.  T.  COULTER'S  STATEMENT. 

Statement  of  S.  T.  Coulter,  of  Santa  Rosa,  muster  of  the  State  grange 
and  one  of  the  directors  of  the  State  board  of  agriculture  of  California. 

I  cannot  allow  my  silence  to  impress  the  minds  of  your  committee 
with  the  conviction  that  either  I  or  the  members  of  the  organization 
of  which  I  have  the  honor  to  be,  for  the  present  time,  the  head  and 
representative  take  no  interest  in  the  subject  your  committee  has  under 
consideration.  The  abuses,  the  extortions,  and  discriminations  of  which 
we  have  been  made  the  victims  by  the  transcontinental  railroad  com- 
panies have  made  us  so  keenly  alive  to  the  importance  of  the  subject 
that  when  Judge  Reagan's  interstate-commerce  bill  was  first  under  con- 
sideration in  Congress  petitions  were  circulated  in  all  the  granges  of 
the  State,  and  signed  by  almost  every  voting  member,  praying  for  its 
immediate  passage.  They  were  also  circulated  throughout  the  farming 
portion  of  the  State  and  signed  indiscriminately  by  persons  of  all  pur- 
suits. There  is  no  subject,  except  perhaps  that  of  restricting  Chinese 
immigration,  on  which  our  people  are  so  unanimous  in  sentiment  as 
that  of  the  regulation  of  interstate  commerce  by  Congress. 

I  say  by  Congress.  First,  because  the  Constitution  has  delegated 
that  authority  and  duty  to  the  Congress  of  the  United  States.  By  the 
authority  "  to  regulate  commerce  with  foreign  nations,  and  among  the 
several  States  and  with  the  Indian  tribes,"  we  understand  that  the 
Congress  of  the  United  States  is  clothed  with  power  to  pass  laws  for 
the  regulation  of  such  commerce,  not  to  appoint  some  person  or  persons 
and  confer  on  him  or  them  the  power  and  duty  to  establish  and  enforce 
rules  for  the  regulation  of  such  commerce.  Second,  because  bur  exper- 
ience with  railroad  commissioners,  and  our  observation  of  the  manner 
in  whieh  they  have  performed  the  trust  committed  to  them  elsewhere, 
lead  us  to  doubt  whether  it  would  be  possible  to  get  a  commission  that 
would  give  the  needed  relief. 


INTERSTATE    COMMERCE. 

We  have  more  confidence  in  a  law  enacted  by  Congress  fixing  the 
rates  of  freights  and  fares,  prohibiting  pooling  and  discriminations, 
and  providing  punishment  for  its  violation.  We  are  not  insensible  of 
the  vast  importance  and  utility  of  railroads.  We  recognize  them  as 
indispensable  to  modern  civilization,  and  have  no  desire  to  impair  their 
ability  to  perform  their  proper  function  of  transporting  speedily  and 
safely  from  place  to  place  both  persons  and  commodities  for  a  fair  and 
just  compensation,  to  be  paid  alike  by  all  in  proportion  to  the  service 
rendered. 

But  we  are  unwilling  that  they  shall  continue  to  enjoy  and  exercise 
one  of  the  great  powers  of  the  Government  (that  of  eminent  domain), 
to  enable  them  to  monopolize  a  new  and  valuable  discovery  in  the  art 
of  transportation  (the  great  benefit  of  which  ought  to  inure  to  the  peo- 
ple), and  use  them  as  an  engine  of  oppression. 

While  we  recognize  the  fact  that  the  construction  and  operation  of 
railroads  require  the  exercise  of  great  abilities  and  the  expenditure  of 
large  sums  of  money — abilities  that  are  entitled  to  liberal  compensa- 
tion, and  moneys  that  ought  to  receive  a  fair  return  for  their  use — we 
cannot  forget  that  corporations  are  creatures  of  Government  j  that 
they,  being  artificial  persons,  have  and  can  have  no  natural  rights  j 
and  that  it  is  the  duty  of  the  Government  that  permits  their  existence 
to  protect  the  people  from  their  tyranny  and  oppression. 


MILTON  GEORGE'S  STATEMENT. 

Statement  of  Milton  George,  of  Chicago,  secretary  of  the  National  Far- 
mers' Alliance  and  editor  of  the  Western  Rural. 

(1)  The  best  method  of  preventing  extortion  and  discrimination  is  to 
make  a  maximum  rate  and  provide  heavy  penalties  for  discrimination, 
which  practically  secures  a  minimum  rate. 

(2)  As  a  rule  the  through  rates  are  reasonable  enough,  especially  from 
competing  points.    Local  rates  are  generally  too  high. 

(3)  Publicity  of  rates  should  be  required  by  law,  and  changes  of 
rates  should  be  prohibited  without  public  notice. 

'4)  A  maximum  rate  should  be  established,  and  by  compelling  the 
managers  of  the  roads  to  treat  all  shippers  alike,  a  minimum  rate  will 
practically  be  made. 

(5)  The  tariffs  should  be  adjusted  as  far  as  possible  to  suit  the  con- 
ditions of  trade,  so  that  the  roads  may  earn  reasonable  dividends  on 
the  actual  and  not  the  fictitious  value  of  their  investment. 

(6)  Eebates  should  be  entirely  prohibited  by  law. 

(7)  Pooling  can  do  no  harm  if  the  tariff  is  kept  within  the  limit  of 
the  maximum  rate  fixed  by  law,  but  should  be  made  public  and  sub- 
ject to  official  approval. 

(8)  Provision  should  be  made  to  secure  to  shippers  the  right  to  select 
the  line  or  parts  of  line  over  which  their  goods  shall  go. 

(9)  Uniform  rates  can  best  be  secured  by  a  commission,  we  believe, 
though  there  may  be  a  better  system. 

(10)  A  corporation  should  be  allowed  to  charge  a  lower  proportionate 
rate  for  a  long  than  for  a  short  haul.    There  is  too  much  difference  now, 
.and  the  subject  needs  legislation. 

(11)  No  concessions  to  large  shippers  over  small  should  be  allowed, 


118  INTERSTATE    COMMERCE. 

except  such  as  represent  the  actual  difference  in  the  expense  of  hand- 
ling large  shipments  over  small.  Car-lots  should  be  made  uniform, 
•whether  one  or  more. 

(12)  Corporations  engaged  in  interstate  commerce  should  be  required 
to  adopt  a  uniform  system  of  accounts. 

(13)  Such  corporations  should  be  required  to  make  annual  reports  to 
the  Government  of  earnings,  expenses,  &c. 

(14)  It  is  not  important  that  the  Government  should  develop  and 
maintain  a  system  of  water  routes  to  secure  cheap  transportation. 

(15)  A  commission  or  other  tribunal  should  be  established  to  enforce 
legislation  for  the  regulation  of  interstate  commerce. 


ALEXANDER  A.  ARNOLD'S  STATEMENT. 

Statement  of  Alexander  A.  Arnold,  of  Galesville,  president  of  the  State 
Board  of  Agriculture  of  Wisconsin. 

I  am  glad  to  know  that  Congress  has  seen  fit  to  appoint  a  committee 
for  the  purpose  of  investigating  and  reporting  relative  to  interstate 
commerce.  The  subject  is  so  broad  that  one  can  give  but  little  infor- 
mation from  a  local  standpoint.  It  is  a  subject  that  has  interested  me 
and  upon  which  I  have  been  considerably  exercised  in  the  past.  Public 
sentiment  has,  however,  had  a  controlling  influence  on  these  corpora- 
tions and  they  have  not  of  late  been  as  indiscreet  in  their  management 
as  they  once  were.  This  with  competition  in  many  instances  has  cor- 
rected many  of  the  past  errors.  However,  I  have  no  doubt  that  the 
Government  has  the  right  and  should  exercise  it  by  in  some  way  con- 
trolling their  management,  so  that  the  people  shall  not  be  plundered 
and  that  railroad  property  shall  be  allowed  reasonable  profits  on  the 
amount  of  labor,  skill,  and  capital  employed,  unless  such  a  number  of 
lines  have  been  built  as  would  require  extortion  from  the  people  to  make 
each  pay.  A  correct  public  sentiment  has  a  benign  influence  in  correct- 
ing abuses  in  semi-public  enterprises,  but  it  is  ofttimes  slow  in  correcting 
existing  evils,  and  whenever  not  under  surveillance  the  natural  greed 
of  man  takes  advantage  of  any  laxity. 

(1)  The  best  method  of  preventing  extortion  and  discrimination  is  by 
a  just  law  to  be  enforced  by  a  commission. 

(2)  In  this  section  at  this  date  the  rates  are  generally  fairly  reason- 
able, except  where  there  is  no  competition. 

(3)  Rates  should  be  published  and  no  change  made  without  public 
notice. 

(4)  Maximum  rates  should  be  established  on  all  lines. 

(5)  No  doubt  the  elements  of  cost  of  management  must  be  considered 
in  fixing  tariffs,  otherwise  property  invested  in  railroad  enterprises 
would  be  more  insecure  than  at  present. 

(6)  I  believe  the  system  of  rebates  is  pernicious. 

(7)  No  pool  has  yet  been  made  that  the  law  will  sustain,  and  none 
should  be  allowed. 

(8)  Shippers  should  probably  have  the  right  to  select  the  lines  over 
which  their  shipments  shall  be  transported  by  paying  proportionate 
rates. 

(9)  The  best  method  of  securing  uniformity  of  rates  is  by  a  commission, 
but  that  is  where  the  work  comes  in  and  it  will  take  experts  to  devise  a 
proper  law. 


INTERSTATE    COMMERCE.  119 

(10)  There  is  no  doubt  that  the  roads  should  have  more  lor  short  than 
long  hauls,  but  the  proportion  should  be  made  by  men  (or  law)  not  in- 
terested ;  otherwise  the  railroad  corporation  is  above  the  law  in  this 
regard,  and  what  they  lose  on  one  line  can  be  made  up  on  another,  or 
what  is  lost  on  competing  points  can  be  made  up  at  non-competing 
points. 

(11)  No  concessions  should  be  allowed  to  large  shippers.    If  so,  there 
is  no  uniformity  and  other  monopolies  are  thus  encouraged. 

(12)  A  uniform  system  of  accounts  should  be  required.     This  is  one 
of  the  best  things  to  be  introduced  first,  and  thereby  find  out  some 
things  that  will  be  a  basis  for  future  legislation. 

(13)  If  the  roads  are  to  be  controlled  by  law,  they  should  certainly  be 
required  to  make  reports,  and  thus  have  a  way  of  showing  any  injustice 
in  case  of  defects  in  the  law. 

(14)  The  development  of  water  routes  depends  upon  the  expensiveness 
of  the  enterprise,  so  that  wherever  it  can  be  done  and  not  make  it  in 
the  end  more  expensive  to  the  people  than  by  other  transportation  it  is 
advisable,  as  it  is  on  all  navigable  streams. 

(15)  The  regulation  of  interstate  commerce  can  best  be  enforced  by 
law  and  a  commission,  subject  to  the  final  decision  of  the  courts  as  other 
final  adjustments. 

Should  your  committee  be  able  to  find  a  railroad  expert  broad  enough 
to  comprehend  the  situation  and  understand  that  in  the  near  future 
their  safety  and  best  security  lies  in  the  direction  of  Government  con- 
trol to  a  limited  extent,  he  would  be  of  great  use  to  you.  What  the 
people  have  been  asking  for  they  will  yet  ask  for  themselves. 


A.  J.  KOSE'S  STATEMENT. 

Statement  of  A.  J.  Rose,  ofSalado,  Bell  County,  master  of  the  State  Grange 

of  Texas. 

The  prevailing  opinion  among  the  class  I  represent  is  that  legislation 
is  badly  needed.  This  belief  is  rapidly  growing  in  Texas.  I  will  re- 
ply in  brief  to  the  questions  seriatim. 

(1 )  Maximum  rates  should  be  fixed  by  law  and  the  penalty  so  great 
and  redress  so  speedy  as  to  prevent  frequent  violations  of  it. 

(2)  The  present  local  and  through  freights  in  our  State  are  unjust  in 
this :  there  is  too  much  difference.    The  present  maximum  local  rates 
are  too  high  and  through  rates  too  low,  perhaps.    This,  if  possible, 
should  be  remedied. 

(3)  The  publishing  of  rates  should  be  required  by  law;  also  changes 
in  rates  as  made. 

(4)  I  would  say,  fix  a  maximum  rate,  reasonable,  but  not  a  minimum. 

(5)  Freights  should  be  paid  according  to  the  class.    That  is,  value 
and  liability  to  damage  for  which  the  carrier  is  responsible. 

(6)  Drawbacks  and  rebates  should  be  prohibited  by  law. 

(7)  If  maximum  rates  are  made  reasonable  let  them  pool. 

(8)  Provision  should  be  made  by  law  for  securing  to  shippers  the 
right  to  select  the  lines  over  which  their  shipments  shall  be  transported. 

(9)  Uniformity  of  rates  can  be  best  secured  by  national  legislation 
and  the  agents  of  railroads. 

(10)  I  would  say  that  railroads  should  be  allowed  to  charge  lower 


120  INTERSTATE    COMMERCE. 

proportionate  rates  for  long  than  for  short  hauls.  Maximum  rates 
should  be  fixed  to  prevent  discriminations  against  persons  and  places. 
!No  legislation  on  the  subject  is  required  other  than  to  make  charges 
equal  to  all  dealers  and  producers. 

(11)  £o  differences  should  be  permitted  in  the  charges  per  car  for  one 
or  twenty.    All  charges  should  be  made  public. 

(12)  The  railroads  should  be  required  to  adopt  a  uniform  system  of 
accounts. 

(13)  I  think  they  should  be  required  to  make  reports  to  an  extent  suf- 
ficient to  enable  the  Government  to  know  that  the  laws  had  not  been 
violated  and  their  net  income  per  cent,  on  the  investment. 

(14)  All  water  routes  should  be  developed  until  their  full  value  has 
been  reached. 

(15)  Legislation  can  be  best  enforced  by  making  the  penalties  very 
heavy  against  our  county  and  State  officers  for  not  doing  their  duty  in 
the  enforcement  of  our  National  and  State  laws.     With  laws  properly 
defining  the  duties  of  our  State  and  county  officers,  with  penalties  suffi- 
ciently heavy,  I  don't  think  that  we  would  need  any  commissioners  or 
other  additional  tribunal. 

We  hope  that  the  committee  may  be  able  to  agree  upon  such  recom- 
mendations as  will  be  just  to  the  roads  and  just  to  the  people.  Our 
people  demand  nothing  more  nor  nothing  less.  We  think  it  wrong  for 
a  speculator  set  up  at  a  station  to  secure  such  advantages  in  the  reduc- 
tion of  freight  per  car  as  will  force  the  producer  to  sell  to  him.  We 
think  that  the  producer  with  one  car  of  grain,  stock,  or  other  freight 
should  not  have  to  pay  more  for  that  car  than  the  speculator  who  ships 
twenty  cars.  We  think  that  the  railroads  should  give  producers  an 
equal  chance.  The  farmers  need  the  roads  and  the  roads  need  the 
farmers.  We  contend  that  it  is  wrong  for  the  roads  to  make  these  dis- 
criminations. The  roads  have  no  better  friends  than  the  farmers,  none 
who  would  stand  by  them  closer  if  they  would  stop  this  discrimination. 
The  mere  fact  of  one  man  shipping  20  cars  of  grain  and  twenty  men 
shipping  20  cars  does  not  change  the  number  of  cars,  but  it  does  in- 
crease, and  largely,  too,  in  our  State,  a  surplus  of  middle-men  at  the  ex- 
pense of  the  producer  and  consumer.  Yes ;  let  the  roads  come  to  the 
producer  and  consumer  and  they  will  come  to  them.  The  farmers  are 
ready  to  meet  them  on  middle  ground.  They  only  want  justice. 


E.  A.  GILLEK'S  STATEMENT. 

Statement  of  E.  A.  Giller,  of  White  Hall,  master  of  the  State  Grange  of 

Illinois. 

(1)  Government  will  have  to  take  control  of  or  build  one  or  more  lines 
of  road  from  the  Eastern  sea-board  to  the  Western  settlements,  and  fur- 
nish to  the  people  transportation  at  cost.    Data  will  thus  be  furnished 
to  base  future  action  on. 

(2)  I  call  your  attention  to  the  fact  that  when  the  waterways  are 
closed,  up  go  freight  rates.    I  cannot  say  much  about  through  rates, 
but  think  local  rates  are  too  high,  and  will  give  my  reasons.     Before 
there  was  so  much  complaint  about  unjust  discrimination,  it  was  cus- 
tomary for  both  the  Chicago,  Burlington  and  Quincy  and  the  Chicago 
and  Alton  railroads  to  allow  the  shippers  on  those  roads  a  rebate  of  $5 
per  car.    Of  course  they  did  most  of  the  shipping,  and  if  the  rate  was 


INTERSTATE    COMMERCE.  121 

$32.50  to  Chicago  from  this  point  it  only  cost  them  $27.50.  Therefore 
I  conclude  that  they  were  charging  us  poor  devils  of  outsider  $5  a  car 
too  much. 

(3)  Publicity  of  rates  should  certainly  be  required  by  law.     Any 
honest  business  will  bear  publicity,  and  nothing  to  my  mind  hurts  busi- 
ness more  than  uncertainty. 

(4)  I  do  not  see  how  to  get  at  the  advisability  of  establishing  a  sys- 
tem of  maximum  and  minimum  rates  without  carrying  out  my  views  as 
given  in  answer  to  the  first  question.    I  do  not  like  these  cast-iron  rules 
that  have  no  elasticity. 

(5)  If  the  tariff  is  fixed,  it  should  be  based  on  the  actual  (not  fictitious) 
cost  of  road,  allowing  a  fair  rate  of  interest,  which,  in  my  opinion,  ought 
not  to  exceed  the  rate  paid  on  Government  bonds  with  taxes  thereon. 

(6)  Eebates  and  drawbacks  ought  to  be  entirely  prohibited. 

(7)  The  question  as  to  pooling  is  a  difficult  one  to  answer.    We  want 
to  foster  and  protect  the  railroads,  and  if  any  plan  can  be  devised  to 
keep  them  from  cutting  their  own  throats  I  should  say  prohibit  pool- 
ing.   But  if  allowed  to  pool,  make  it  public  by  all  means. 

(8)  It  seems  reasonable  that  shippers  should  have  the  right  to  select 
the  lines  over  which  their  shipments  shall  be  transported,  all  other  things 
being  equal. 

(9)  I  know  of  no  better  way  of  securing  a  uniform  system  of  rates  than 
that  indicated  in  my  first  answer. 

(10)  As  to  the  question  of  legislating  upon  the  long  and  the  short 
haul,  I  think  it  better  to  let  this  alone  for  the  present. 

(11)  There  ought  to  be  no  concessions  allowed  to  large  shippers  ex- 
cept such  as  represent  the  actual  difference  in  the  expense  of  handb'ng 
large  shipments  over  small  shipments. 

(12)  If  a  uniform  system  of  accounts  could  be  adopted  it  would  sim- 
plify matters  very  much,  and  the  general  public  would  understand  mat- 
ters more  readily. 

( 13)  Annual  reports  to  the  Government  are  desirable,  and  the  state- 
ments ought  to  be  comprehensive  and  full. 

(14)  In  making  provision  for  securing  cheap  transportation,  the 
Government  should,  by  all  means,  develop  a  system  of  water  routes. 

(15)  In  order  to  enforce  legislation  there  ought  to  be  authority  of 
some  kind,  so  that  those  having  grievances  could  make  the  same  known 
and  have  the  matter  ati  ended  to  without  expense  to  the  complainant. 

I  have  answered  the  questions  to  the  best  of  my  ability.  The  answers 
I  know  are  crude,  but  they  will  give  an  idea  of  the  way  farmers  look  at 
these  matters.  One  important  question  you  did  not  ask,  and  that  is 
the  free-pass  question,  which  I  look  upon  as  a  monstrous  evil.  If  you 
succeed  in  putting  an  end  to  that  you  will  have  conferred  an  inestim- 
able benefit  upon  the  people. 


J.  L.  NEAL'S  STATEMENT. 

Statement  of  J.  L.  Neal,  of  Harrodsburg,  master  of  the  Kentucky  State 

Grange. 

I  hail  with  much  pleasure  any  move  that  will  directly  or  indirectly 
relieve  the  agricultural  interests  of  the  country  from  the  great  wrongs 
they  suffer  from  the  unjust  discriminations  of  railroads. 

The  best  method  of  preventing  extortion  and  unjust  discrimination 


122  INTERSTATE    COMMERCE. 

is  by  national  legislation,  fixing  heavy  penalties  and  forfeiture  of 
charter. 

The  rates  now  charged  are  unreasonably  high,  particularly  on  way 
freights. 

Publicity  of  rates  should  be  required  by  law,  and  changes  without 
public  notice  should  be  prohibited.  The  best  method  of  securing  uni- 
form and  stable  rates  is  by  legal  enactment  with  heavy  penalty. 

A  system  of  maximum  and  minimum  rates  should  be  established. 

Rebates  and  drawbacks  should  be  entirely  prohibited. 

Pooling  should  be  entirely  prohibited. 

The  law  should  secure  to  shippers  the  right  to  select  the  lines  over 
which  their  shipments  shall  go. 

A  uniform  system  of  rates  can  be  secured  by  classifying  the  roads 
and  freights. 

Corporations  engaged  in  interstate  commerce  should  not  be  permitted 
to  charge  a  lower  proportionate  rate  for  a  long  than  for  a  short  haul. 
The  public  interest  requires  legislation  on  this  subject. 

No  concessions  in  rates  should  be  allowed  to  large  shippers. 

The  railroads  should  be  required  to  adopt  a  uniform  system  of  ac- 
counts, and  to  make  full  and  honest  reports  to  the  Government. 

It  is  important  that  the  Government  should  develop  and  maintain  a 
system  of  water  routes. 

Legislation  for  the  regulation  of  interstate  commerce  can  best  be  en- 
forced by  a  commission  composed  of  one  good  man  from  all  the  leading 
interests  except  agriculture,  and  as  that  is  the  greatest  of  all  interests 
we  should  have  two  on  the  commission. 


MILES  NORTON'S  STATEMENT. 

Statement  of  Miles  Norton,  of  Deanville,   Wis.,  secretary  of  the  State 

Farmers'  Alliance. 

(1)  The  best  method  of  preventing  extortion  and  unjust  discrimina- 
tion by  corporations  engaged  in  interstate  commerce  is  to  first  remove 
the  desire  from  such  corporations  to  extract  from  the  producers  money 
they  do  not  earn  by  law  of  Congress,  giving  them  7  per  cent,  on  money 
actually  invested  by  said  corporations  over  and  above  actual  expenses, 
the  balance,  if  any,  to  be  paid  into  the  Treasury  of  the  Government  as 
an  income  tax. 

(2)  Rates  are  not  reasonable,  some  riding  on  free  passes,  others  pay- 
ing 4  cents  per  mile;  some  getting  rebates,  others  paying  full  freight. 

(3)  Rates  should  be  made  public.    The  only  method  of  securing  uni- 
formity is  by  law  of  Congress. 

(4)  Rates  should  be  established  by  law  of  Congress  or  by  commis- 
sioners appointed  by  Congress.    A  majority  of  said  commission  should 
be  Democrats  under  a  Democratic  administration. 

(5)  The  cost  of  the  road  should  be  considered  in  fixing  the  tariffs. 

(6)  No  rebates  should  be  allowed. 

(7)  Pooling  should  not  be  permitted. 

(8)  Shippers  do  the  paying  and  should  have  the  right  to  select  the 
lines  over  which  their  shipments  shall  be  carried. 

(9)  Uniform  rates  can  only  be  secured  by  law  of  Congress. 

(10)  The  public  interest  require  legislation  upon  the  subject  of  the 
rates  charged  for  long  and  short  hauls. 


INTERSTATE   COMMERCE.  123 

(11)  No  concessions  should  be  made  to  large  shippers,  except  such  as 
represent  the  actual  difference  in  the  expense  of  handling  large  ship- 
ments over  small  shipments,  and  such  concessions  should  be  made 
known  to  the  public. 

(12)  A  uniform  system  of  accounts  should  be  required. 

(13)  Reports  should  be  made  to  the  Government  or  the  commissioners 
of  their  earnings  and  expenses. 

(14)  Water  routes  should  be  maintained. 

(15)  The  regulation  of  interstate  commerce  can  best  be  enforced  by 
law  of  Congress  through  commissioners.    A  majority  of  one  of  said 
commissioners  should  be  of  the  same  political  party  as  the  President. 

Congress  should  make  it  a  penal  offense  for  any  person  to  accept  or 
use  a  free  pass  over  any  road  in  the  United  States,  punishable  by  fine 
and  imprisonment. 


J.  D.  LYMAN'S  STATEMENT. 

Statement  of  J.  D.  Lyman,  of  Exeter,  lecturer  of  the  State  Grange  of  New 
Hampshire  (made  by  request  of  the  master,  Colonel  Stinson). 

(1}  The  best  method  of  preventing  extortion  and  unjust  discrimination 
is  by  the  best  laws  that  can  be  devised  and  wise  and  just  commissioners 
with  large  powers. 

(2)  I  cut  timber,  valuable  without  railroads,  because  of  nearness  to 
market,  and  which  cost  considerable  before  railroads  were  built,  and 
paid  $20  per  car  freight  from  near  the  middle  to  the  end  of  the  road, 
while  other  parties,  taking  timber  nearly  worthless  before  the  road  was 
built,  transported  their  lumber  the  entire  length  of  the  road,  as  I  was 
informed  and  believe,  for  $18  per  car.    I  was  paying  a  public  agent  for 
transportation,  for  labor  performed,  and  this  agent  had  no  right  to 
charge  me  above  a  fair  price  or  to  perform  the  labor  for  others  at  less 
than  a  fair  price.     Neither  had  this  public  agent  a  right  to  improperly 
supply  my  market  and  thereby  depreciate  the  value  of  my  lumber 
where  it  stood,  and  unduly  increase  the  value  of  lumber  in  the  wild 
regions.     Worse  still,  when  I  wanted  to  send  my  ship  timber  6  miles 
over  the  same  road  to  another  road  they  charged  $10  per  car.     Their 
plea  in  the  first  instance  was  the  competition  of  other  routes,  and  in 
the  second  instance  their  desire  to  transport  my  timber  over  more  miles 
of  their  road ;  that  is,  to  send  ship  timber  inland.    They  ought  to  have 
charged  me  about  $5  per  car  for  the  6  miles,  and  from  $15  to  $20  for 
the  longer  distance,  and  not  depressed  my  market  by  so  cheap  through 
transportation.     My  remedy  for  evils  of  this  nature  is  judicious  and  just 
laws  and  a  wise  commission  with  ample  power. 

(3)  Bates  per  car-load  at  least  should  be  public,  and  public  notice  of 
change  should  be  given  a  certain  length  of  time  before  the  change  is 
made. 

(4)  Some  roads  should  charge  more  per  mile  per  car  than  others  be- 
cause of  greater  cost,  less  business,  and  worse  grades,  &c.    Actual  cost 
plus  Fair  Profit  should  equal  Freight  Bill  as  a  general  proposition.     A 
car-load  of  the  same  goods  over  the  same  road  from  A  to  B  should  be 
at  the  same  charge,  for  the  question  of  ownership  has  nothing  to  do  with 
the  cost  of  transportation,  and  favoritism  is  closely  allied  to  fraud. 

(5)  In  fixing  tariffs  the  cost  of  road,  grades,  running  expenses,  amount 
of  business,  &c.,  should  be  considered. 

(6)  I  think  rebates  and  drawbacks  should  be  entirely  prohibited. 


124  INTERSTATE    COMMERCE. 

(7)  Pooling  should  perhaps  be  permitted  in  some  cases;  certainly  so 
if  good  reasons  can  be  given  for  pooling,  and  certainly  not  without  good 
reasons.  If  pooling  is  permitted  it  should  be  public  and  by  sanction  of 
the  railroad  commissioners.  Railroads  have  large  duties  to  perform, 
are  great  public  benefactors,  and  should  have  the  fostering  care  of  the 
Government,  and  not  be  hampered  by  needless  legal  restrictions,  but 
ought  never  to  be  permitted  to  act  unjustly  with  the  public,  with  the 
humblest  citizen. 

(9)  In  the  matter  of  securing  uniform  rates,  justice  and  impartiality 
are  what  we  want.     One  road  may  be  able  to  transport  cheaper  than 
another.     Any  road  should  charge  a  fixed  rate  per  car  per  mile  for  local 
freights,  with  suitable  and  just  charges  for  extra  time,  labor,  and  cost 
for  short  distances. 

(10)  Railroads  should  be  allowed  to  charge  a  lower  proportionate  rate 
for  a  long  than  a  short  haul,  but  not  less  in  proportion  to  cost.    The 
public  interest  probably  requires  legislation  on  the  subject. 

(11)  As  to  concessions  to  large  shippers,  I  think  there  should  be  equal 
and  exact  justice  to  all,  whether  great  or  small,  and  publicity  of  freight 
charges. 

(32)  Uniform  methods  of  accounts  are  very  desirable  and  should  be 
required  in  all  cases,  unless  there  be  cases  where  the  trouble  and  ex- 
pense to  the  road  would  outweigh  the  benefit  to  all  interested. 

(13)  The  report  to  the  Government  and  stockholders  might  be  the 
same.    It  would  take  some  time  and  study  to  prepare  the  schedule  or 
blank  for  a  proper  report. 

(14)  It  is  not  important  that  the  Government  should  develop  water 
routes  as  competitors  in  the  transportation  business.     I  believe  in  "  in- 
ternal improvements"  in  certain  cases  for  the  development  of  the 
country.    Never  admit  that  the  Government  cannot  control  the  railroads 
and  secure  fair  freights  and  justice  to  the  people  except  by  establishing 
competing  routes.    The  people  have  been  woefully  cheated  in  expend- 
ing so  much  to  sustain  this  Government  if  it  is  as  weak  and  contempt- 
ible as  this  would  indicate. 

(J5)  Without  professing  to  have  mastered  the  subject,  my  impressions 
favor  commissioners  with  large  and  judicial  powers. 

The  watering  of  stock,  favoritism,  unjust  local  freights,  bribery,  and 
free  passes  for  improper  purposes  are  perhaps  the  five  great  sins  and 
consequent  errors  in  our  railroad  management,  so  far  as  the  public  is 
concerned. 


MILTON  TRUSLER'S  STATEMENT. 

Statement  of  Milton  Trusler,  of  Bentley,  master  of  the  Indiana  State 

Grange. 

(1)  The  best  method  of  preventing  extortion  and  discrimination  is  by 
a  law  limiting  the  rates  of  charges. 

(3)  Publicity  of  rates  should  be  required  by  law,  and  changes  with- 
out public  notice  should  be  prohibited.    The  best  method  of  securing 
uniformity  of  rates  is  by  a  heavy  penalty  for  violation. 

(4)  Maximum  rates  should  be  established. 

(6)  Rebates  and  drawbacks  should  be  prohibited. 

(7)  Pooling  should  be  entirely  prohibited  by  law. 

(8)  Provision  should  be  made  by  law  for  securing  to  shippers  the 
right  to  select  the  lines  over  which  their  shipments  shall  be  carried. 


INTERSTATE    COMMERCE.  125 

(10)  The  railroads  should  not  be  permitted  to  charge  lower  rates  for 
long  than  for  short  hauls.    There  should  be  a  heavy  penalty  for  viola- 
tion. 

(11)  No  concession  in  rates  should  be  made  to  large  shippers. 

(12)  The  railroads  should  be  required  to  adopt  a  uniform  system  of 
accounts. 

(13)  They  should  be  required  to  make  reports  to  the  Government 
showing  their  total  receipts,  expenditures,  and  profits. 

(14)  It  is  important  that  the  Government  should  develop  and  main- 
tain a  system  of  water  routes. 

(15)  Legislation  for  the  regulation  of  interstate  commerce  can  be  best 
enforced  by  heavy  penalties  for  violation  of  the  laws  enacted. 


S.  C.  CAEE'S  STATEMENT. 

Statement  of  S.  C.  Carr,  of  Milton  Junction,  master  of  the  State  Orange  of 

Wisconsin. 

(1)  The  best  method  of  preventing  extortion  and  discrimination  is 
for  Congress  to  pass  an  interstate-commerce  act. 

(2)  The  rates  now  charged  are  too  high  by  one-half.    Look  at  the 
watered  stock. 

(3)  Publicity  of  rates  should  be  required  by  law.    Changes  of  rates 
•without  public  notice  should  be  prohibited.  The  best  method  of  securing 
uniformity  of  rates  is  through  action  by  Congress. 

(4)  Maximum  and  minimum  rates  should  be  established. 

(6)  In  fixing  the  tariffs  all  the  elements  of  cost  and  conditions  of  busi- 
ness should  be  considered,  and  " live  and  let  live"  the  motto. 

(6)  Eebates  and  drawbacks  should  be  prohibited. 

(7)  Pooling  should  be  prohibited  by  law. 

(8)  Provision  should  be  made  by  law  for  securing  to  shippers  the 
right  to  select  the  lines  over  which  their  shipments  shall  be  transported. 

(9)  The  present  rates  should  be  reduced  one  half. 

(10)  Eailroads  should  be  permitted  to  charge  lower  rates  for  long 
than  for  short  hauls,  but  the  public  interest  requires  legislation  on  the 
subject. 

(11)  No  concessions  whatever  should  be  allowed  to  anybody,  rich  or 
poor. 

(12)  A  uniform  system  of  accounts  should  be  required. 

(13)  Annual  reports  to  the   Government   should  be  required,  and 
should  contain  all  the  information  possible  about  the  corporations. 

(14)  The  Government  should  by  all  means  develop  and  maintain  a 
system  of  water  routes. 

(15)  Legislation  can  best  be  enforced  by  good  officers,  and  a  commis- 
sion should  be  established  to  carry  out  the  provisions  of  any  law  Con- 
gress may  enact. 


D.  GILLIS'S  STATEMENT. 

Satement  of  D.  Gillis,  of  Jamestown,  master  of  the  Georgia  State  Grange. 

I  have  no  doubt  in  my  mind  but  that  corporations  do  charge  too  much 
in  some  cases  for  freight  and  passengers,  but  just  how  Congress  can 
remove  these  grounds  of  complaint  I  am  not  now  able  to  say.  They 


126  INTERSTATE    COMMERCE. 

should  not  be  allowed  to  give  any  free  passes,  or  to  allow  any  rebate  or 
drawback  to  large  shippers  except  such  as  represent  the  actual  differ- 
ence in  the  expense  of  handling,  and  they  should  only  be  allowed  such 
rates  as  would  pay  a  reasonable  per  cent,  on  actual  cost  of  road,  not  on 
watered  stock. 


WILLIAM  H.  WILSON'S  STATEMENT. 

Statement  of  William  H.  Wilson,  of  Lake  City,  master  of  the  State  Grange 

of  Florida. 

The  discrimination  of  freights  in  favor  of  one  place  over  another  is  a 
great  hindrance  to  the  prosperity  of  the  country;  also  the  discrimina- 
tion in  freights  in  favor  of  the  larger  shipper  over  the  smaller,  and  the 
larger  dealer  over  the  smaller  dealer,  all  tends  to  paralyze  the  energies 
of  the  person  of  small  means  and  throws  the  profits  into  the  hands  of 
the  few,  whose  efforts  are  just  in  proportion  to  the  amount  of  money 
they  have  under  their  control.  Hence  I  advocate  no  discrimination  in 
such  cases  as  I  have  alluded  to. 


H.  S.  HAINES'S  STATEMENT. 

Statement*  by  H.  S.  Haines,  of  Savannah,  Ga.,  general  manager  of  the 
Savannah,  Florida  and  Western  and  the  Charleston  and  Savannah  Rail- 
way companies. 

UNJUST  DISCRIMINATION  AND  EXTORTION. 

It  is  common  to  couple  the  charge  of  extortion  with  unjust  discrim- 
ination when  exception  is  taken  to  railroad  tariffs,  but  what  is  meant 
by  extortion  in  this  connection  has  not  been  clearly  stated.  Webster 
defines  extortion  as  "  the  act  or  practice  of  wresting  anything  from  a 
person  by  force,  duress,  menaces,  authority,  or  by  any  undue  exercise 
of  power;  illegal  exaction;  illegal  compulsion  to  pay  money  or  to  do 
some  other  act."  This  definition  seems  to  refer  to  the  tyrannical  con- 
duct of  a  government  official,  in  defiance  of  law,  and  its  application  to 
railroad  tariffs  seems  inappropriate.  The  charge  of  unjust  discrimina- 
tion is  capable  of  definite  application  to  railroad  rates.  The  expression 
"unjust  discrimination"  recognizes  that  discrimination  may  be  just, 
and  leads  us  to  consider,  first,  as  to  what  discrimination  in  railroad 
tariffs  means,  and  then  as  to  what  constitutes  unjust  discrimination. 

Discrimination  is  primarily  a  departure  from  uniformity.  Uniformity 
in  its  simplest  form  would  be  the  transportation  of  every  kind  of  freight 
for  any  distance,  over  one  or  more  roads,  at  the  same  rate. 

But  lumber  and  feathers  have  not  a  uniform  weight  as  compared  with 
their  bulk,  nor  a  uniform  value,  and  if  a  uniform  rate  were  to  be  applied 
to  both,  the  lumber  shipper  would  claim  that  the  rate  must  be  so  fixed 
that  he  could  ship  lumber  with  a  margin  of  profit,  and  the  shipper  of 
feathers  would  be  well  satisfied  with  the  same  rates.  Therefore  the 
public  is  not  interested  in  having  a  classified  freight  tariff  so  long  as  the 

*Mr.  I  liiint-s  stated  that  his  replies  were  directed  principally  to  the  interstate  com- 
merce of  South  Carolina,  Georgia,  Florida,  and  Alabama,  with,  which  he  is  familiar. 


INTERSTATE    COMMERCE.  127 

uniform  rate  applied  to  all  articles  will  permit  the  profitable  shipment 
of  the  heaviest,  bulkiest,  and  least  valuable  of  them.  Why,  then,  are 
freights  classified  at  all,  since  the  public  could  be  equally  well  served 
by  a  uniform  rate  ?  The  answer  is  that  unclassified  rates  "would  not  be 
"just  and  reasonable "  to  the  carriers — that  goods  should  be  classed 
with  a  view  to  their  weight,  value,  and  convenience  for  handling,  in 
order  that  the  carrier  may  get  a  larger  profit  out  of  transporting  silks 
and  other  light  and  costly  articles,  and  thereby  be  enabled  to  charge  a 
lesser  profit  on  coal,  lumber,  and  other  articles  of  little  value  in  propor- 
tion to  their  weight.  Here  is  a  plain  case  of  discrimination  against  that 
class  of  citizens  which  manufactures,  deals  in,  or  purchases  silks,  spices, 
feathers,  willow  ware,  &c.,  ostensibly  to  benefit  the  carrier,  but  practi- 
cally for  the  benefit  of  that  other  class  of  citizens  which  produces, 
manufactures,  deals  in,  or  purchases  lumber,  coal,  iron,  &c.  This  fun- 
damental departure  from  a  strictly  uniform  tariff  may  be  seen  in  its 
simplest  form  in  the  charter  of  the  Georgia  Eailroad  Company,  which 
recognizes  but  two  classes  of  freight :  "  heavy  articles,"  to  be  carried 
by  weight,  and  "  light  articles,"  to  be  carried  by  cubic  measure. 

After  many  years  of  differing  views  among  railroad  managers  and  of 
complaints  and  protests  from  shippers,  each  road  or  group  of  roads  ar- 
rived at  a  classification  which  served  its  purpose  and  caused  no  com- 
plaint from  local  shippers ;  but  when  a  shipment  was  to  be  made  over 
several  roads  or  groups  of  roads  the  varying  classification  caused  in- 
convenience to  the  roads  and  annoyance  to  the  shippers.  The  estab- 
lishment of  the  Southern  Eailroad  and  Steamship  Association  was  fol- 
lowed by  the  appointment  of  a  committee  from  among  its  members 
which,  after  long  deliberation,  prepared  A  classification  based  upon  the 
trunk-line  classification  in  the  Northern  and  Western  States.  Every 
road  in  the  association  adopted  it,  making  special  rates  for  certain  arti- 
cles, such  as  lumber  on  the  sea-coast  roads,  coal  and  iron  on  the  mount- 
ain roads,  and  oranges  and  early  vegetables  on  the  lines  leading  from 
Florida.  When  the  Georgia  railroad  commission  came  into  being  it 
found  a  uniform  classification  already  in  existence,  and  very  wisely  re- 
frained from  any  extensive  meddling  with  it. 

Besides  charging  different  rates  for  different  classes  of  goods,  another 
departure  from  uniformity  was  made  by  charging  different  rates  for 
transporting  the  same  class  of  goods  different  distances,  and  looking 
from  the  shipper's  side  it  is  difficult  to  see  the  justice  of  this  discrimi- 
nation. Why  should  a  farmer  who  lives  200  miles  from  Savannah  pay 
more  for  having  his  cotton  carried  there  than  one  who  lives  only  100 
miles  distant  ?  The  one  gets  no  more  for  his  cotton  than  the  other,  and 
yet  he  is  discriminated  against  because  he  is  so  unfortunate  as  to  live 
farther  away  from  market.  There  is  more  justice  in  such  a  position 
than  will  at  first  be  admitted,  and  it  has  been  recognized  for  many  years 
in  the  transportation  of  fertilizers  in  the  Southern  States,  evidently  to 
the  advantage  of  manufacturers  and  of  planters.  This  shows  that  if 
rates  had  originally  been  charged  without  regard  to  distance,  as  is  still 
the  case  with  river  steamboat  transportation,  shippers  would  have  had 
no  cause  to  complain,  so  long  as  the  uniform  rate  was  low  enough  for 
profitable  sale  or  use  of  the  goods  after  reaching  their  destination.  But 
there  was  more  profit  to  the  carrier  in  making  two  trips  per  day  with 
the  same  engine  and  cars  than  in  a  single  daily  trip,  or  perhaps  only  one 
trip  in  two  days  ;  and  here  again,  as  with  classifying  goods,  the  original 
motive  for  discrimination  was  to  favor  the  carrier ;  i.  e.  it  was  unjust 
and  unreasonable  to  expect  him  to  get  no  more  profit  out  of  a  car  loaded 
for  a  point  two  days  distant  than  if  it  could  be  returned  the  next  day, 


128  INTERSTATE    COMMERCE. 

or  perhaps  the  same  day.  This  was  probably  the  cause  of  discriinina- 
tiou  for  distance  allowed  in  the  Georgia  Railroad  Company's  charter, 
which  allowed  an  additional  charge  for  every  hundred  miles.  But  after 
awhile  the  reason  for  this  discrimination  was  forgotten,  and  the  man 
shipping  goods  50  miles  thought  it  a  hardship  to  pay  as  much  as  the 
man  that  shipped  100  miles.  The  man  that  shipped  10  miles  would  not 
pay  more  than  if  he  shipped  by  wagon,  and  so  the  principle  that  rates 
should  be  somehow  proportioned  to  distance  got  so  well  established 
that  it  became  customary  to  place  several  stations  lying  consecutively 
together  in  one  group  for  the  purpose  of  making  freight  rates,  although 
the  same  group  would  sometimes  include  stations  lying  30  or  40  miles 
apart.  This  saved  the  railroad  companies  a  multiplicity  of  rates,  and 
the  dealers  at  adjacent  stations  generally  paid  the  same  rates,  so  that 
it  worked  out  satisfactorily  to  both  parties. 

The  Georgia  railroad  commission  has  ignored  this  custom  of  group- 
ing stations  in  making  the  standard  tariff.  Their  rate  on  first  class  for 
10  miles  is  16  cents  per  100  pounds ;  for  20  miles,  20  cents ;  for  30  miles, 
24  cents  ;  so  the  man  living  20  miles  from  Savannah  pays  10  cents  more 
per  100  pounds  than  he  who  lives  10  miles  nearer,  and  10  cents  less 
than  if  he  lived  10  miles  farther.  But  if  he  lived  250  miles  from  Savan- 
nah he  will  pay  only  1  cent,  per  100  pounds  more  than  his  neighbor 
10  miles  distant  on  one  side,  and  1  cent,  per  100  pounds  less  than 
the  neighbor  10  miles  distant  on  the  other  side.  The  principle  upon 
which  this  tariff  is  based  cannot  be  ascertained  from  an  examination  of 
it ;  the  ratio  of  increment  of  rates  with  each  increase  of  distance  is  varia- 
ble with  each  class  of  rates  and  for  every  distance.  The  rate  on  coal 
for  10  miles  is  50  cents  per  ton,  and  for  iron  80  cents  per  ton,  so  for  10 
miles  iron  pays  30  cents  (or  60  per  cent.)  more  than  coal  does ;  but  fol- 
low the  distance  in  each  class  out  to  250  miles  and  the  rate  is  the  same 
for  both  articles,  while  for  350  miles  the  rate  is  80  cents  per  ton  more  on 
coal  than  on  iron.  For  some  reason  the  ratio  is  so  variable  that  the 
class  of  goods  which  for  10  miles  paid  30  cents  per  ton  more  than  the 
other,  paid  80  cents  less  per  ton  if  both  were  carried  350  miles.  I  think 
that  this  class  of  discriminations  originated  with  the  Georgia  railroad 
commission. 

The  next  class  of  discrimination  iu  rates  is  in  permitting  two  corpo- 
rations, each  operating  a  road  100  miles  in  length,  to  charge,  each  of 
them,  the  100-mile  rate  for  freight  passing  over  the  entire  length  of 
both  lines;  whereas  if  the  same  200  miles  of  road  had  belonged  to  the 
same  corporation  the  200-mile  rate  would  have  been  charged.  For  in- 
stance, referring  again  to  the  standard  tariff  of  the  Georgia  railroad 
commission,  goods  in  first  class  for  100  miles  are  charged!  at  45  cents 
per  100  pounds ;  therefore,  on  a  shipment  over  the  Western  and  Atlan- 
tic road,  from  a  point  100  miles  west  of  Atlanta  to  a  point  on  the 
Georgia  Railroad  100  miles  east  of  Atlanta,  each  road  would  get  45 
cents  per  100  pounds  and  the  consignee  would  pay  90  cents ;  but  if 
both  roads  had  belonged  to  the  same  corporation  he  would  have  paid 
70  cents  per  100  pounds.  Why  should  the  shipper  in  one  instance  be 
so  much  more  favored  than  in  the  other!  There  can  be  but  one  an- 
swer, viz,  that  the  discrimination  is  in  favor  of  the  two  corporations, 
and  is  rendered  necessary  because  the  tariff'  is  based  upon  a  scale  of 
rates  for  distances  varying  unequally  as  the  distances  increase.  For  in- 
stance, under  the  tariff  of  the  Georgia  railroad  commission  goods  in  first 
class,  shipped  over  300  miles  under  one  corporation,  pay  80  cents  per 
100  pounds,  but  if  the  same  goods  were  shipped  the  same  distance  for 
the  same  price  over  two  roads,  one  of  which  was  200  miles  long  and 


INTERSTATE    COMMERCE.  129 

the  other  100  miles  long,  how  is  the  amount  to  be  divided?  Is  the 
road  over  200  miles  long  to  claim  the  rate  of  70  cents  allowed  for  that 
distance  and  leave  the  other  road  only  10  cents  out  of  the  total  80  cents 
for  its  100  miles;  or  is  the  IQO-mile  road  to  claim  the  45  cents  allowed 
for  that  distance  and  leave  the  200-mile  road  only  35  cents  for  double 
the  distance?  This  inconsistency  can  only  lie  avoided  by  allowing 
each  road  to  charge  its  local  rates ;  and  here  again,  to  favor  these  two 
corporations,  shippers  are  discriminated  against  in  a  way  that  they 
would  not  be  if  shipping  the  same  distance  over  a  single  road ;  or  to 
state  the  same  thing  in  another  way,  the  commission  considered  it  un- 
just and  unreasonable  to  the  railroads  to  require  equal  rates  for  equal 
distances  under  such  circumstances. 

The  next  class  of  discrimination  is  where  equal  amounts  of  goods  of 
the  same  class  are  shipped  equal  distances  over  different  roads.  It 
would  seem  that  in  such  eases  the  railroad  commission  should  put  a 
citizen  living  at  Savannah  upon  an  equality  with  a  citizen  living  at 
Atlanta;  but  if  the  latter  ships  second-class  goods  100  miles  out  ot  At- 
lanta to  a  station  on  the  Georgia  Railroad  he  pays  40  cents  per  100 
pounds,  but  if  the  Savannah  citizen  ships  the  same  goods  the  same  dis- 
tance on  the  Central  Eailroad  he  must  pay  4S  cents,  or  -0  per  cent, 
more.  The  only  reason  that  can  be  given  for  this  discrimination  is,  that 
since  the  tonnage  of  the  Central  Eailroad  is  less  than  that  of  the  Georgia 
Uailroad  it  would  be  unjust  and  unreasonable  to  require  the  former  road 
to  charge  no  more  than  the  latter  for  performing  the  same  service. 

There  is  another  class  of  discrimination  which  affects  different  quali- 
ties of  the  same  class  of  goqds  shipped  the  same  distance,  known  as 
car-load  rates.  In  these  cases  the  shipper  of  a  car-load  of  the  same 
articles  to  the  same  consignee  is  allowed  a  rate  of  20  to  30  per  cent. 
less  than  is  charged  to  the  shipper  of  a  lesser  quantity,  for  the  reason 
that  a  full  load  for  the  car  is  thereby  insured,  with  the  cost  of  only  one 
entry  on  a  way-bill,  considerations  which  seem  to  warrant  the  State 
commission  in  requiring  the  railroad  company  to  do  the  same  amount 
of  work  for  less  money  for  the  one  citizen  than  for- the  other.  I  have 
been  particular  in  citing  the  rates  made  by  the  Georgia  railroad  com- 
mission as  instances  of  that  kind  of  discrimination  which  was  not  in 
the  interest  of  the  railroad  company,  since  they  were  made  by  an  offi- 
cial body  appointed  in  the  interest  of  the  shippers,  from  whose  decision 
there  is  no  appeal,  and  who  have  officially  reported  that  by  reduction 
in  rates  they  have  saved  the  people  in  one  year  an  amount  equal  to  the 
entire  State  taxes.  It  may  therefore  be  fairly  presumed,  that  the  dis- 
criminations embodied  in  their  official  freight  tariffs  cannot  be  consid- 
ered as  unjust  toward  shippers.  What  are  the  discriminations  ? 

(1)  That  goods  offered  for  shipment  are  classified;  that  is,  that  dif- 
ferent rates  are  charged  for  different  classes. 

(2)  That  different  rates  are  charged  for  transporting  different  goods 
for  different  distances. 

(3)  That  the  rate  of  increase  in  rates  for  distance  is  variable  with  each 
class  of  rates  and  for  every  distance. 

(4)  That  the  scale  of  rates  for  distance  only  applies  to  shipments  over 
the  line  of  one  corporation,  and  is  applied  afresh  to  the  same  shipment 
when  it  passes  on  to  the  line  of  another  corporation. 

.  (5)  That  the  scale  of  rates  for  distance  may  vary  for  different  roads, 
as  between  a  road  with  a  light  and  with  a  heavy  tonnage. 

(G)  That  the  scale  of  rates  for  distances  may  vary  for  different  ship- 
pers, where  one  has  a  car  load  to  ship  and  the  other  has  nor. 

These  principles  have  been  applied  by  the  Georgia  railroad  eommis- 

16232  A? 0 


150  INTEKSTATE    COMMEKCE. 

sion  only  to  what  is  known  as  local  business,  or  that  for  which  there  * 
no  competition.  They  would  be  as  applicable,  under  such  conditions, 
to  interstate  commerce  as  to  that  which  is  contained  within  the  borders 
of  one  State. 

But  the  State  commission  before  mentioned  had  to  meet  the  require- 
ments of  competitive  traffic.  For  instance,  between  Augusta  and 
Savannah  there  were  rival  routes,  one  altogether  within  the  State  and 
the  jurisdiction  of  the  commission,  and  others  which  were  not.  The 
Georgia  Central  was  permitted  to  charge  34  cents  per  100  pounds,  or 
about  $1.56  per  bale  on  cotton  from  Augusta  to  Savannah,  but  the  com- 
petition by  a  rival  route  through  South  Carolina  prevented  that  com- 
pany from  getting  any  cotton  at  that  price.  They  could  not  get  more, 
perhaps,  than  $1  per  bale.  But,  under  the  rules  of  the  commission,  if 
they  adopted  less  freight  rates  from  one  station,  they  were  required  to 
make  a  reduction  of  the  same  per  cent,  at  all  stations  along  the  line  of 
the  road,  "  so  as  not  to  make  an  unjust  discrimination  against  any  per- 
son or  locality."  So  this  company  could  not  lower  its  rates  on  cotton 
from  Augusta  one-third  without  reducing  its  cotton  rates  one-third 
from  every  other  station  on  its  line.  Whereupon  the  railroad  commis- 
sion issued  an  additional  order,  as  follows : 

"  Competing  lines  not  all  within  the  jurisdiction  of  the  commission. 
When,  however,  from  any  point  in  this  State  there  are  competing  lines, 
one  or  more  not  subject  to  ttye  jurisdiction  of  the  commission,  then  the 
line  or  lines  which  are  so  subject,  and  are  working  at  the  lowest  rate 
under  the  rules,  may,  at  such  competing  point,  make  rates  below  the 
standard  tariff  to  meet  such  competition  without  making  a  correspond- 
ing reduction  along  the  line  of  road." 

Under  this  amendment,  what  becomes  of  the  "unjust  discrimination 
against  a  locality?"  Why  should  Augusta  shippers  be  given  a  lower 
rate  than  is  allowed  to  a  station  10  miles  nearer  Savannah  ?  Is  this 
not  a  discrimination  against  a  locality  ?  It  evidently  is,  and  can  only 
be  a  "just  and  reasonable"  discrimination  because  it  is  to  the  benefit 
of  the  railroad  corporation. 

And  because  it  is  to  the  benefit  of  the  railroad  corporation  it  is  to  the 
benefit  of  the  public  at  large  and  indirectly  to  the  benefit  of  the  shipper 
from  a  station  where  there  is  no  competition  and  where  there  is  a  greater 
charge  for  a  less  distance,  as  I  will  proceed  to  show.  Eailroads  are 
built  to  accommodate  communities  dependent  for  transportation  upon 
water- courses,  turnpikes,  or  public  roads.  They  furnish  cheaper  and 
more  convenient  facilities  than  such  communities  before  possessed,  but 
still  it  costs  something  to  maintain  and  operate  them.  If  no  charge 
w.us  made  for  using  them,  this  cost  would  have  to  be  met  by  taxation. 
But  whether  met  by  taxation  or  by  charging  .freight  and  passenger 
rates,  it  is  a  tax  at  least  upon  the  communities  which  have  no  other  road 
to  market.  If  it  costs  $600,000  per  annum  to  keep  up  a  road,  then  the 
money  must  come  out  of  the  freight  and  passengers  that  are  obliged  to 
pass  over  it.  Whether  the  amount  of  business  be  small  or  large,  the 
money  to  keep  up  the  road  must  be  forthcoming,  or  it  will  go  to  decay. 
If  100,000  bales  of  cotton  were  the  only  freight  that  passed  over  a  road 
which  carried  no  passengers,  that  cotton  would  have  to  pay  a  freight 
of  $6  per  bale  if  it  cost  $600,000  per  annum  to  maintain  the  road,  and 
no  legislation  could  make  it  otherwise.  But  if  the  quantity  of  cotton, 
to  be  transported  could  be  increased  to  200,000  bales,  then  the  cost  of 
transportation  could  be  fixed  at  $3  per  bale,  to  the  great  joy  and  relief 
of  the  shippers  of  the  first  100,000  bales  ;  and  yet  the  $600,000  required 
to  operate  the  road  would  be  forthcoming.  Now,  suppose  that  the 


INTERSTATE    COMMERCE.  131 

community  which  raised  this  second  100,000  bales  had  a  water  route  to 
market  and  said  to  the  railroad  company,  "It  only  costs  a  dollar  per 
bale  to  ship  our  cotton  by  water,  but  we  prefer  to  ship  it  by'rail  at  the 
same  price,"  who  whonld  be  benefited  if  the  company  took  the  cotton 
at  a  dollar  per  bale  ?  Who  "but  the  local  shippers  themselves,  for  with- 
out this  addition  to  the  business  of  the  road  they  would  have  to  pay 
$600,000  per  year,  or  $6  per  bale,  to  keep  up  the  road,  while  with  the 
$100,000  obtained  from  the  other  100,000  bales  of  competitive  or  through 
cotton  they  would  have  to  pay  but  $500,000  or  $5  per  bale  on  their 
own  cotton.  Should  they  turn  around  upon  the  managers  of  the  rail- 
road and  say  that  it  was  unjust  to  the  local  shippers  to  charge  only  a 
dollar  per  bale  on  the  through  cotton  ?  No,  it  is  not  only  just,  but  to  the 
benefit  of  the  local  shippers,  that  the  railroad  which  they  are  obliged 
to  use  should  get  all  the  business  it  can  from  those  who  are  not  obliged 
to  use  it,  and  at  any  rate  the  latter  choose  to  pay,  provided,  and  it  is  a 
very  important  provision,  that  such  competitive  business  adds  something 
to  the  net  revenue  of  the  road ;  or,  in  other  words,  if  it  be  carried  at 
anything  above  the  actual  cost  of  transportation.  Once  this  fact  is 
established,  that  a  road  is  carrying  competitive  freight  at  any  rate  above 
the  cost  of  transportation,  it  follows  that  such  rate  is  not  only  just  and 
reasonable  to  the  shipper  and  to  the  corporation,  but  it  is  of  benefit  to 
the  local  shipper  also,  since  it  relieves  his  own  burden  to  the  extent  of 
the  net  profit  derived  from  the  through  business. 

I  have  already  defined  the  discriminations  in  local  freight  tariffs 
which  may  be  considered  as  just  and  reasonable,  and  have  shown  that 
it  is  not  an  unjust  discrimination  against  local  shippers  for  competitive 
freights  to  be  transported  atness  rates  for  the  same  or  greater  distance. 
It  remains  to  state  what  are  unjjust  discriminations. 

(1)  It  is  unjust  to  discriminate  between  persons ;  that  is,  to  charge  one 
person  less  than  another  for  the  same  service. 

(2)  It  is  unjust  to  discriminate  between  shippers  of  different  quanti- 
ties of  the  same  article,  except  under  conditions  which  enable  the  rail- 
road company  to  perform  the  service  more  economically,  as,  for  instance, 
between  a  car-load  and  a  quantity  less  than  a  car-load,  and  perhaps 
when  a  full  train  load  is  offered  as  a  single  shipment. 

(3)  It  is  an  unjust  discrimination  to  transport  competitive  freight  at 
less  than  would  be  charged  for  local  freight  under  the  same  conditions 
of  quantity  and  distance  if  the  competitive  rate  will  yield  no  profit 
above  the  cost  of  transportation. 

Taking  a  practical  view  of  the  subject,  it  would  seem  that  the  charge 
of  unjust  discrimination  is  generally  made  with  a  reference  to  com- 
petitive rates.  Communities  at  non-competitive  points  complain  that 
their  rates  to  and  from  market  are  higher  than  for  a  longer  haul  at 
competitive  points.  This  cannot  be  prevented  unless  competition  is 
prohibited,  or  the  offending  company  is  forbidden- to  compete.  As 
above  stated,  it  is  not  unjust  that  the  rate  between  competitive  points 
should  be  less  than  for  a  shorter  haul  on  non-competitive  business, 
unless  such  rate  is  below  the  cost  of  transportation.  How  can  com- 
petitive rates  be  maintained  above  the  cost  of  transportation  I  The 
answer  is,  by  combination  among  the  competitors.  Whenever  public 
opinion  and  the  respect  paid  by  lawyers  to  precedents  will  permit  con- 
tracts for  this  purpose  to  be  legally  enforced,  instead  of  being  stig 
mati/ed  as  unlawful,  rates  at  competitive  points  will  be  maintained  at 
figures  sufficiently  above  the  cost  of  the  service  to  add  to  the  net  reve- 
nue of  the  competing  companies  and  leave  a  margin  for  relief  to  local 
shippers.  As  matters  now  stand,  the  local  shippers  on  the  trunk  lines 


132  INTERSTATE    COMMERCE. 

are  contributing  to  the  maintenance  of  a  wicked  war  of  rates  between 
Western  markets  and  the  seaboard.  Conservative  railroad  managers 
have  sought  to  prevent  this  by  framing  agreements  to  maintain  these 
rates,  only-to  see  their  companies  defrauded  by  unscrupulous  rivals  who 
entered  into  these  agreements  because  they  knew  they  could  be  violated 
with  impunity.  When  legislators  and  judges  require  men  who  enter 
knowingly  into  such  contracts  to  keep  them  as  inviolate  as  they  are 
required  to  keep  their  other  agreements,  competitive  rates  will  be  main- 
tained upon  a  profitable  basis  and  competitive  business  will  contribute  its 
proper  quota  to  the  net  revenue  of  railroad  companies.  Nor  need  ship 
pers  who  are  interested  in  competitive  business  fear  that  if  such  contracts 
are  legally  enforced  the  rates  will  be  injuriously  high.  The  competition 
between  different  cities  engaged  in  shipping  the  same  products  will  be 
sufficient  to  prevent  this.  The  railroad  managers  specially  interested 
at  Cincinnati,  or  Chicago,  or  Saint  Louis  will  see  to  it  that  what  they 
consider  their  own  legitimate  trade  is  not  diverted  by  a  disparity  of 
rates.  They  are  quite  as  keen  observers  of  the  course  of  business  as 
are  their  patrons,  and  will  be  as  swift  to  mark  its  fluctuations. 

Combination  for  an  exorbitant  advance  of  rates  at  all  competitive 
points  is  impracticable.  The  two  great  interior  water  routes,  the  one 
by  the  Mississippi  to  New  Orleans,  and  the  other  by  the  Great  Lakes 
from  Chicago,  Milwaukee,  &c.,  will  always  regulate  this  matter,  in  con- 
nection with  the  coastwise  steamships  on  the  Atlantic,  the  Gulf  of 
Mexico,  and  the  Pacific. 

The  legalization  of  contracts  intended  to  maintain  competitive  rates 
will  also  prevent  the  most  unjust  kindt  of  discrimination  that  can 
exist — that  between  man  and  man. 

There  can  be  no  form  of  discrimination  more  reprehensible  than  that 
by  which  one  shipper  from  the  same  point  is  secretly  favored  at  the 
expense  of  another  in  the  same  line  of  business.  The  favored  one  can 
be  made  rich  by  the  same  process  that  makes  his  competitor  bankrupt ; 
and  that  is  just  what  is  done  through  that  unrestricted  competition 
which  railroad  managers  condemn.  The  much-abused  pooling  system 
is  an  attempt  to  obtain  rates  upon  competitive  business  that  are  above 
the  cost  of  transportation,  and  until  some  better  device  is  offered  to 
obtain  the  same  end,  those  who  are  interested  in  legislation  to  prevent 
unjust  discrimination  should  not  permit  themselves  to  be  argued  into 
opposition  to  pools.  To  those  interested  in  maintaining  unrestricted 
competition  no  argument  in  favor  of  pools  need  be  addressed,  for  upon 
them  it  would  have  no  effect.  What  they  want  are  rates  lower  than 
any  one  else  can  get,  even  though  they  be  below  the  cost  of  the  service 
rendered ;  what  they  desire  is  not  in  accord  with  the  interest  either  of 
the  railroads  or  of  the  public  in  general,  and  yet  the  "pooling- 
system"  has  its  advantages  for  them  also,  for  it  does  away  with  the 
pernicious  "  rebate  system,"  a  system  which  takes  the  making  of  rates 
away  from  railroad  managers  and  puts  the  power,  not  in  the  hands  of 
the  legislators,  but  of  speculators — men  who  make  their  profits,  not 
from  buying  and  selling  in  open  market,  but  out  of  rebates  secretly 
paid  by  railroad  managers,  and  virtually  at  the  expense  of  those  who 
pay  the  published  rates. 

This  system  went  on  from  bad  to  worse,  centering  the  business  of 
competitive  points  in  fewer  hands,  drawing  the  business  of  neighboring 
stations  to  competitive  points,  and  rendering  it  impracticable  for  a  man 
with  a  small  capital  to  establish  himself  in  business  under  such  disad- 
vantages. No  wonder  that  the  railroad  managers  themselves  revolted 
against  this  condition  of  things.  They  no  longer  controlled  their  own 


INTERSTATE    COMMERCE  133 

business.  Under  the  threat  of  losing  freights  they  were  forced  to  make 
concessions  which  they  knew  were  wrong.  They  were  annoyed  by  ap- 
plications which  it  was  impolitic  to  refuse,  and  met  with  suspicion  and 
charges  of  treachery  from  the  very  men  who  were  being  made  rich  by 
rebates,  yet  feared  that  some  one  else  might  be  getting  better  rates. 
When  competition  got  too  fierce  «one  of  the  contending  parties  would 
call  a  truce,  and  peace  would  be  re-established  upon  a  basis  of  higher 
rates,  which  no  one  expected  to  use  for  any  other  purpose  than  as  ;i 
standard  by  which  to  measure  rebates.  No  wonder  that  railroad  man- 
agers accused  each  other  of  fraud  and  deception.  Men  who  in  all  the 
other  relations  of  life  were  blameless  winked  at  falsehoods  and  dallied 
with  deception,  not  because  they  were  morally  debased,  but  actually 
because  they  knew  not  the  way  out  of  the  toils.  Specious  methods  of 
maintaining  agreements,  and  yet  breaking  them,  were  devised  to  meet 
the  occasion.  Secret-service  funds  were  placed  at  the  disposal  of  trusted 
agents,  not  to  be  accounted  for;  through-passage  tickets  were  sold  to 
favored  shippers,  never  to  be  paid  for;  and  one  tissue  of  fraud  and  de- 
ception was  woven  after  another  until  the  web  became  so  fine  as  to  be 
worthy  of  the  father  of  lies  himself.  It  is  this  rebale  system,  with  its 
corrupting  influences,  that  Congress  is  expected  to  call  back  to  life  by 
threatening  pains  and  penalties  upon  the  railroad  corporations  that  have 
replaced  it  by  the  pooling  system — a  system  which,  so  far  from  being 
placed  under  the  ban  of  the  law,  should  be  legalized.  The  public  calls 
for  legislation  against  rebates  as  loudly  as  fdr  legislation  against  extor- 
tion and  unjust  discrimination;  but  until  human  nature  can  be  changed 
by  \iitf  rebates  will  be  paid  in  one  way  or  another  where  unrestricted 
competition  exists.  Congress  should  seek  to  prevent  unrestricted  com- 
petition as  well  as  unjust  discrimination,  and  the  railroad  companies 
have  themselves  pointed  out  the  way.  If  the  pooling  system  be  legal- 
ized— that  is,  if  a  party  to  a  contract  to  maintain  rates  can  be  sued  for 
damages  for  violating  such  an  agreement — then  the  local  shippers  at 
competitive  points,  paying  only  just  and  reasonable  rates,  freed  from 
all  fear  of  discriminating  rebates,  will  find  that  their  business  will  not 
suffer  from  the  greed  of  corporations,  but  will  prosper  under  rates  alike 
for  all. 

SECOND  ANSWER. 

The  committee's  second  question  is  as  to  the  reasonableness  of  the 
rates  now  charged  upon  local  and  through  traffic  by  corporations  en- 
gaged in  interstate  commerce. 

The  answer  to  this  question  depends  upon  the  meaning  of  the  word 
"reso.iableness."  Webster  defines  it  as  "that  state  or  quality  of  a 
thing  which  reason  supports  or  justifies."  It  may,  therefore,  be  asked 
whether  reason  supports  or  justifies  the  rates  charged  on  local  and 
through  traffic.  As  to  through  or  competitive  traffic,  it  may  be  said 
that  reason  will  not  support  or  justify  competitive  rates  which  are  not 
equal  to  the  cost  of  the  service  rendered,  nor  secret  rebates  to  a  large 
shipper,  while  small  shippers  are  made  to  pay  the  published  rates. 
Whether  it  be  reasonable  to  charge  local  shippers  higher  rates  than 
are  charged  upon  competitive  business  transported  longer  distances 
depends  upon  the  considerations  contained  in  my  reply  to  the  first 
question.  The  reasonableness  of  local  rates  depends  upon  considera- 
tions of  a  different  character.  As  stated  in  the  reply  to  question  No.  1, 
the  local  traffic  must  yield  sufficient  revenue  to  maintain  a  railroad,  ex- 
cept so  far  as  revenue  for  this  purpose  may  be  contributed  by  competi- 
tive traffic.  But  while  the  local  traffic  in  mass  must  support  a  road,  a 


134  INTERSTATE   COMMERCE. 

certain  reasonable  relation'  should  of  course  be  preserved  in  making 
rates  upon  the  various  articles  offered  for  shipment.  That  this  ideal 
state  of  reasonableness  has  been  obtained  is  not  to  be  asserted.  Indeed, 
the  process  of  reasoning  by  which  rates  for  carriage  were  originally 
established  and  subsequently  developed  cannot  be  accurately  traced 
Many  essential  facts  have  been  allowed  to  lapse  unnoticed  into  oblivion. 
The  common  carrier  by  land  was  originally  a  carter,  and  when  his  occu- 
pation was  shared  by  railroad  corporations  their  rates  were  naturally 
based  upon  carters' rates.  And  as  railroads  came  to  compete  with  car- 
riers by  water  their  rates  were  still  further  modified. 

It  must  be  borne  in  mind  that  what  is  called  local,  or  non-competitive 
business,  though  not  subject  to  competition  by  other  railroads,  is  still 
open  to  competition  by  wagons  or  by  water  carriage.  Special  competi- 
tion may  exist,  as  in  the  transportation  of  coal  by  canals,  which  would 
not  affect  the  transportation  by  rail  of  other  commodities;  but  as  a  gen- 
eral thing  the  reasonableness  of  local  rates  in  the  early  days  of  railroads 
seems  to  have  been  attained  by  a  division  of  articles,  as  wet  and  dry 
barrels,  boxes,  and  bales,  or  shipments  in  bulk.  The  advance  from  such 
a  state  of  things  to  the  modern  freight  classification,  substantially  uni- 
form throughout  the  United  States,  is  unquestionably  an  effort  to  adjust 
the  rates  upon  articles  varying  in  value,  bulk,  fragility,  &c.,  in  such  a  way 
as  to  distribute  the  contribution  of  each  shipment  to  the  sum  total  of  local 
revenue  equitably  among  them  all.  And  this  is  "  a  quality  which  reason 
supports  or  justifies,"  for  the  charge  upon  a  shipment  is  made  up  of  two 
elements — the  class  in  which  the  article  is  placed  and  the  rate  upon  that 
class.  It  is  much  easier  to  fix  the  relations  of  articles  by  classes  than 
,the  relation  of  the  rates  which  should  be  charged  upon  the  several 
classes.  It  is  the  latter  consideration  which  enters  chiefly  into  the  es- 
tablishment of  the  amount  which  each  class  of  goods  must  contribute  to 
the  maintenance  of  the  railroad.  There  are  no  accurately  defined  rules 
for  determining  this  matter.  Kailroad  logic  and  mathematics  have  not 
reached  this  summit  of  perfection.  We  have  inherited  the  rates  which 
our  predecessors  have  fixed  under  conditions  above  noted.  We  have 
modified  them  here  and  there  as  circumstances  seemed  to  require,  and 
such  will  continue  to  be  the  process.  Our  methods  will  improve  as  our 
knowledge  increases.  The  method  of  classification  now  in  use  may  un- 
doubtedly be  considered  a  reasonable  one.  As  to  the  fixing  of  local 
rates,  there  is  but  little  method  about  it.  Railroad  managers  are  much 
divided  as  to  what  would  be  a  rational  basis.  Of  course  such  a  basis 
should  recognize  what  is  termed  "  the  cost  of  transportation."  But  what 
is  meant  by  "the  cost  of  transportation1?"  Ask  half  a  dozen  railroad 
managers,  and  you  will  probably  receive  as  many  different  replies. 

I  will  repeat  that  the  local  traffic  must  pay  for  maintaining  the  rail- 
road, assisted  as  far  as  may  be  by  competitive  traffic.  But  what  con- 
stitutes "  maintaining  a  railroad  ?  "  It  includes  the  cost  of  maintaining 
the  property  and  paying  the  men.  Somewhere  among  those  expendi- 
tures lie  concealed  the  items  which  go  to  make  up  that  desideratum, 
"  the  cost  of  transportation."  One  eminent  authority  arbitrarily  divides 
the  total  expenditure  ratably  between  passenger  mileage  and  freight 
mileage,  and  says  that  the  "  cost  of  transportation  "  is  so  much  per  pas- 
senger mile  and  so  much  per  freight  mile.  If  this  assertion  could  pass 
undisputed  our  task  would  be  indeed  an  easy  one.  We  could  fix  a  rea- 
sonable rate  of  profit  upon  the  stockholders'  investment,  divide  that  out 
per  passenger  and  freight  mile,  and  any  school-boy  could  solve  the 
problem  of  "just  and  reasonsonable  rates."  But  the  problem  cannot  be 
solved  in  that  way.  All  the  difficulties  which  have  led  to  fixing  different 


INTERSTATE    COMMERCE.  135 

rates  for  different  distances  and  for  different  articles  forbid  such  a  solu- 
tion. Another  eminent  authority  suggests  that  about  one-half  of  the 
cost  of  maintaining  and  operating  a  road  is  virtually  unaffected  by  the 
amount  of  business  done ;  another  part  is  chargeable  solely  to  passenger 
or  freight  traffic;  certain  expenses  are  greater  or  less,  varying  with  the 
train  or  car  mileage,  or  with  the  amount  of  freight  loaded  or  unloaded. 
This  is  in  the  right  way  to  a  correct  analysis  of  the  items  which  enter 
into  "  the  cost  of  transportation,"  and  some  very  ingenious  and  greatly 
involved  algebraical  formulae  have  been  constructed  to  aid  in  arriving 
at  a  solution.  I  think  that  the  mathematicians  who  framed  them  have 
never  had  sufficient  confidence  in  their  own  Avork  to  apply  it  practically 
to  their  own  business.  The  men  who  are  experienced  in  such  matters, 
who  are  alike  removed  from  fine-spun  theories  and  from  blind  adherence 
to  antiquated  methods,  who,  in  short,  represent  what  may  be  called  the 
common  sense  of  railroad  management,  will  probably  agree  that  the 
reasonableness  of  local  freight  rates  should  be  based : 

(1)  Upon  their  providing  a  net  revenue  sufficient  to  maintain  the 
property  in  good  condition  and  leave  a  fair  profit  to  stockholders.    The 
passenger  traffic  must,  of  course,  contribute  its  share  of  revenue,  and 
competitive  business  should  not  be  conducted  at  the  expense  of  local 
shippers. 

(2)  As  between  the  different  classes  of  local  business,  due  regard 
must  be  paid  to  keeping  certain  rates  at  or  below  the  point  where  a 
suitable  margin  of  profit  is  left  for  the  shipper. 

For  instance,  on  each  road  there  are  certain  staple  articles,  products 
of  the  field,  the  forest,  the  mine,  &c.,  or  manufactured  goods,  that  form 
the  basis  upon  which  the  prosperity  or  the  very  life  of  the  people  is 
based.  The  rates  upon  such  articles  must  not  be  more  than  they  can 
bear.  It  would  be  killing  the  goose  that  lays  the  golden  egg.  It  is 
from  the  margin  of  profit  remaining  to  the  producer  that  he  is  to  pay 
freight  on  the  supplies  which  he  purchases  and  for  his  own  fare  when 
he  travels.  As  specially  applied  to  such  articles,  "the  cost  of  trans- 
portation," that  is,  the  rate  below  which  the  railroad  company  cannot1 
transport  them  without  positive  and  immediate  loss,  can  be  approxi- 
mately ascertained.  It  is  for  the  railroad  management  to  observe  this 
closely,  and  whenever  circumstances  render  it  practicable  the  rates  on 
such  staples  should  be  varied  within  certain  limits  with  the  margin  of 
profit  to  the  consumer.  The  minimum  limit  should  be  the  specific  cost 
of  transportation,  tbat  is,  what  the  corporation  would  save  by  not  trans- 
porting that  particular  article  ;  the  maximum  should  be  the  full  local 
rates  ordinarily  cha  rged  upon  it.  Theoretically,  the  reasonable  rates  to 
be  charged  upon  the  staple  products  of  a  country  would  be  a  fixed  per- 
centage of  the  margin  of  profit  returned  by  the  merchant  to  the  pro- 
ducer; the  charges  of  the  merchant  not  to  include  the  local  freight 
charges,  and  the  railroad  company  to  be  entitled,  in  any  event,  to  the 
specific  cost  of  transportation.  Practically,  it  is  somewhat  in  this  way 
that  rates  are  now  determined  where  they  are  not  established  by  law, 
for  the  carrier  knows  that  if  such  rates  are  higher  than  the  business 
will  bear  that  the  business  will  languish  or  die  out.  There  are  also  cer- 
tain articles  which,  under  certain  conditions,  it  might  be  reasonable  to 
transport  at  the  cost  of  transportation  in  order  to  stimulate  production. 

The  Massachusetts  railroad  commission  advised  the  railroads  of  that 
State  to  transport  coal  lor  manufacturers  at  the  bare  cost  of  transporta- 
tion. They  feared  that  the  cost  of  fuel  for  steam-power  would  divert 
manufacturers  to  other  States  where  coal  was  cheaper.  Was  it  reason- 
able to  expect  this  of  the  railroad  companies  f  Did  reason  support  or 


136  INTERSTATE   COMMERCE. 

justify  this  discrimination  between  coal  for  manufacturers  and  coal  for 
domestic  purposes  ?  The  answers  to  these  questions  cannot  be  defmi  tely 
given  in  our  present  state  of  knowledge  as  to  the  items  which  enter  into 
the  cost  of  transportation. 

The  differences  in  opinion  between  shipper  and  carrier  grew  out  of 
the  want  of  information  on  this  very  subject.  The  attention  of  experts 
has  for  some  time  past  been  attracted  to  it,  and,  as  the  facts  accumulate, 
we  seem  to  be  nearing  the  solution  of  the  problem.  For  the  present  the 
reasonableness  of  local  freight  rates  can  neither  be  asserted  nor  denied 
except  under  unusual  circumstances  ;  certainly  not  with  sufficient  con- 
fidence for  the  conditions  which  should  determine  it  to  be  defined  by 
act  of  Congress. 

THIRD   ANSWER. 

Should  publicity  of  rates  be  required  by  law  ?  Should  changes  of 
rates  without  public  notice  be  prohibited  ?  What  is  the  best  method 
of  securing  uniformity  and  stability  of  rates?  These  are  the  three 
queries  embodied  in  the  third  question  of  the  committee. 

Publicity  of  rates  would  be  a  reasonable  requirement.  It  is  customary 
with  railroad  companies  not  only  to  furnish  such  information  freely, 
upon  application,  but  also  to  print  and  distribute  gratuitously  their 
local  tariff  sheets  and  what  are  known  as  "  open  "  competitive  rates. 
But  they  do  not  give  equal  publicity  concerning  rebates  to.  favored 
customers.  A  penalty  for  secret  rebating — a  legal  enforcement  of  con- 
tracts to  maintain  competitive  rates — would  probably  insure  all  the 
publicity  that  could  be  desired. 

The  changing  of  rates  without  previous  notice  is  injurious  to  shippers 
in  general.  Those  who  had  been  secretly  advised  of  an  intended  change 
of  rates  upon  any  important  article  would  have  an  unjust  advantage 
over  their  less  favored  rivals,  either  as  shippers  or  as  stockholders. 
Uniformity  and  stability  of  rates  are  greatly  to  be  desired.  The  meth- 
ods for  securing  them  have  been  considered  in  my  answers  to  the  first 
and  second  questions. 

FOURTH  ANSWER. 

The  fourth  question  is  as  to  the  advisability  of  establishing  a  system 
of  maximum  and  minimum  rates.  Maximum  rates  were  incorporated 
into  some  of  our  earliest  railroad  charters.  Competition  has  reduced  all 
railroad  rates  far  below  the  maximum  then  established.  At  no  time  do 
they  seem  to  have  served  any  useful  purpose.  If  maximum  rates  were 
re-established,  with  our  present  experience,  they  would  be  just  as  un- 
serviceable. If  a  maximum  rate  of  1  cent  per  ton  per  mile  were  fixed 
for  the  interstate  commerce  of  the  trunk  lines,  competition  with  water 
routes  would  prevent  them  from  demanding  it;  yet  if  such  a  rate  were 
fixed  for  the  commerce  between  the  Southern  States  it  would  perhaps 
bankrupt  the  corporations  affected  by  it. 

Minimum  rates  might  be  of  some  effect  in  preventing  a  reduction  be- 
low the  cost  of  transportation,  if  punishment  could  surely  and  swiftly 
follow  an  infraction  of  the  law ;  but  the  difficulty  of  conviction  would 
bring  the  law  into  contempt,  and  those  who  conscientiously  observed 
it  would  be  the  principal  sufferers.  We  must  remember,  too,  that  the 
ingenuity  and  experience  of  man  has  been  constantly  reducing  the  cost 
of  transportation,  and  what  would  have  been  considered  a  very  low  rate 
some  years  ago  would  leave  a  very  lair  profit  under  the  improved 
methods  now  in  use.  Although  the  rates  have  been  reduced  much 
faster  than  the  expense  of  operating  railroads,  and  the  margin  between 


INTERSTATE    COMMERCE.  137 

them  is  now  proportionately  smaller  than  ever  before,  still  no  one  can 
truly  assert  that  the  utmost  economy  practicable  in  railroad  manage- 
ment has  been  attained.  The  legal  enforcement  of  contracts  to  main- 
tain rates  will  be  of  far  more  protection  to  investors  and  shippers  than 
the  establishment  of  maximum  and  minimum  rates. 

FIFTH  ANSWER. 

The  elements  of  cost,  the  conditions  of  business,  and  the  other  factors 
that  should  be  considered  in  fixing  interstate  tariffs,  have  been  incident- 
ally referred  to  in  the  replies  to  the  previous  questions. 

The  conditions  which  distinguish  competitive  or  through  traffic  from 
that  which  is  local  or  not  competitive  have  also  been  noted.  The  local 
traffic,  freight  and  passenger,  of  any  railroad  must  furnish  the  means 
to  maintain  and  operate  it.  .If  there  be  any  other  traffic,  which  may  be 
diverted  by  competition,  theu  such  competitive  traffic  will  also  con- 
tribute to  the  support  of  the  road  to  the  extent  that  the  receipts  from 
such  service  exceed  the  cost  of  performing  it.  The  expenses  ordinarily 
incurred  in  operating  and  maintaining  a  road  bear  varying  relations  to 
the  work  performed  in  transporting  freight  and  passengers.  They 
may  be  accordingly  divided  into  several  classes,  as — 

Class  A  :  Expenses  not  affected  by  the  amount  of  business  done. 

Class  I! :  Expenses  affected  indirectly  by  the  amount  of  business  done ;  for  instance, 
by  a  considerable,  increase  or  decrease  of  traffic. 

Class  C  :  -Expenses  directly  affected  by  the  amount  of  train  service. 

Class  D  :  Expenses  directly  affected  by  the  amount  of  car  service. 

Class  E  :  Expenses  incurred  in  loading  and  unloading  freight. 

Class  J,  or  fixed  espritdittiroi. — In  this  class  may  be  included  salaries  and  office  ex- 
penses of  general  officers,  legal  expenses,  rents,  taxes,  insurance,  maintenance  of 
earthwork  and  fences,  repairs  to  bridges  and  buildings,'repairs  of  machinery,  tools, 
and  implements,  furniture  and  fixtures,  pay  of  bridge  watchmen,  and  telegraph  ex- 
penses. This  class  of  expenses  virtually  remains  the  same  whether  the  business  done 
be  much  or  little. 

.Class  B:  Expenditures  remotely  affected  by  amount  of  business  done. — Stationery,  print- 
ing and  advertising,  repairs  of  wood  and  water  stations,  renewal  of  cross-ties,  supply- 
ing water  for  locomotives,  labor  on  track,  wages  of  agents,  clerks,  watchmen,  and 
switchmen  at  stations,  loss  and  damage  claims. 

This  class  is  remotely  affected  by  the  amount  of  business  done,  t.  c.,  if  the  business 
be  largely  increased  or  diminished. 

Class  C :  Expenditures  affected  by  train  mileage. — Renewals  of  rails  and  fastenings, 
frogs,  and  switches,  repairs  of  locomotives,  supplies  for  locomotives,  pay  of  conduct- 
ors, engineers,  baggagemen,  firemen,  and  brakemen,  stock  killed  by  trains,  accidents 
to  trains. 

Class  D :  Expenditures  affected  b}/  car  mileage. — Maintenance  of  cars;  oil,  tallow,  and 
waste  for  lubricating  car  axles  ;  hire  of  cars. 

Class  E :  Espendilurvs  affected  by  tonnage. — Labor  loading  and  unloading  freight. 

The  classification  here  given  is  in  sufficient  detail  to  show  that  the 
expense  of  operating  a  railroad  does  not  vary  directly  with  the  amount 
of  traffic ;  that  one  class  of  expenses  bears  no  relation  to  it ;  other 
classes  depend  upon  the  amount  of  service  performed  by  the  engines  or 
cars,  whether  they  are  earning  much  or  little,  and  that  but  a  small  class 
bears  a  direct  relation  to  the  tonnage.  It  should  also  be  noted  that 
much  of  this  expense  has  to  be  incurred  in  preparation  for  business  that 
may  prove  less  than  expected,  and  that  expenses  cannot  be  diminished 
in  the  same* proportion  that  business  decreases. 

It  must  next  be  stated  that  the  business  of  a  railroad  is  twofold  in 
its  character ;  it  transports  passengers  as  well  as  freight,  and  to  ascer- 
tain the  cost  of  performing  each  class  of  service,  the  operating  expenses 
should  be  apportioned  to  the  services  for  which  they  were  incurred. 
This  cannot  be  done  accurately  with  all  classes  of  expense,  and  the  ap- 


138  INTERSTATE    COMMERCE. 

portionment  must,  to  some  extent,  be  based  upon  the  relative  volume 
of  the  two  kinds  of  business. 

The  expenses  specially  incurred  for  passenger  business  are :  The 
salaries  and  office  expenses  of  officials  employed  solely  in  this  service  ; 
also  of  conductors,  engineers,  and  others  employed  only  on  passenger 
trains;  the  maintenance  of  passenger  stations,  and  of  passenger  train 
locomotives  and  cars ;  fuel  for  locomotives ;  advertising  and  other 
printing  and  stationery  required  solely  for  this  purpose. 

The  expenses  specially  incurred  for  freight  business  are :  The  sala- 
ries and  office  expenses  of  officials  so  employed ;  pay  of  men  employed 
on  freight  trains  and  at  freight  stations ;  maintenance  of  freight  sta- 
tions ;  maintenance  of  locomotives  and  cars  in  freight  service  ;  fuel  for 
freight  train  locomotives  ;  advertising  and  other  printing  and  station- 
ery required  solely  for  this  service.  All  other  expenses,  not  specially 
incurred  in  one  service  or  the  otlier,  should  be  divided  between  them 
upon  some  recognized  basis,  and  that  of  the  respective  car  mileage  in 
each  service  will  answer  the  purpose. 

According  to  this  classification  the  operating  expenses  of  the  Savan- 
nah, Florida  and  Western  Bailway,  for  the  year  1884,  have  been  classi- 
fied as  follows : 

Per  cent. 

For  fixed  expenditures,  Class  A t 17 

For  expenses  indirectly  affected  by  amount  of  business  done,  Class  B 32 

For  expenses  affected  by  train  mileage,  Class  C 22 

For  expenses  affected  by  car  mileage,  Class  D 21 

For  expenses  directly  affected  by  amount  of  freight  handled,  Class  E 4 

For  renewals  of  rails 4 

Total ^ 100 

Therefore,  any  increase  or  decrease  in  the  number  of  tons  of  freight 
transported  affects  only  4  per  cent,  of  the  total  cost  of  operations, 
unless  a  greater  or  less  number  of  cars  be  required  to  run  a  greater  or 
less. distance.  , 

Any  increase  or  decrease  in  car  mileage  affects  21  per  cent,  of  the 
total  operating  expenses. 

If  the  increase  of  business  requires  more  trains  to  be  run,  then  22  per 
cent,  of  the  expense  may  be  proportionately  increased.  But  there  re- 
mains 53  per  cent,  of  the  total  cost  of  operating  the  road  that  practi- 
cally cannot  be  decreased  with  a  diminishing  business  without  impair- 
ing the  efficiency  of  the  service,  and  that  need  not  be  increased  when 
additional  business  is  offered. 

It  is  usual  to  state  the  average  cost  for  hauling  one  ton  of  freight  one 
mile,  but  it  does  not  follow  that  the  transportation  of  each  ton  has  cost 
that  amount.  Here  it  is  that  the  facts  are  obtained  in  fixing  the  spe- 
cific cost  of  transportation  of  competitive  traffic.  If  freight  is  offered  at 
a  competing  point  that  can  be  carried  in  a  car  which  would  otherwise 
run  empty,  the  only  cost  incurred  is  for  loading  and  unloading  the 
freight ;  all  obtained  over  that  cost  would  be  profit.  If  the  car  has  to 
be  sent  for  the  freight,  then  an  additional  cost  will  be  incurred  for  the 
distance  that  the  car  runs  to  perform  the  service.  If  the  freight  offered 
amounts  to  enough  to  load  the  train,  then' there  is  the  cost  for  the  train 
service  beyond  the  cost  which  attaches  to  running  each  car  in  the 
train. 

As  a  practical  illustration  of  the  use  that  can  be  made  of  this  infor- 
mation in  fixing  minhnuin  rates  on  competitive  business,  let  us  suppose 
cotton  to  be  offered  to  the  Savannah,  Florida  and  Western  Railway  for 
transportation  from  Baiubridge  to  Savannah,  a  distance  of  237  miles. 


INTERSTATE    COMMER6B.  139 

If  there  be  an  empty  car  at  Bainbridge  to  be  returned  to  Savannah,  the  cost 
will  be  for  loading  and  unloading  30  bales  of  uncompressed  cotton,  say  7-J 
tons,  at  12.6  cents  per  ton $0  94$ 

If  a  car  had  to  be  seut  for  the  freight,  add  the  distance  both  ways,  474  miles, 

at  1.73  cents  per  mile 8  20 

Total  cost  per  car-load 9  14$ 


But  if  a  train  of  say  25  cars  be  required,  then  the  cost  for  25  cars,  at  $9.14$ 

per  car,  would  be -. 

And  for  train  mileage  (474  miles),  at  24. G  cents  per  mile 1 1(>  (50$ 

•  Total  cost  per  train  of  25  cars 34r>  -s.i 


Total  cost  per  car '. 13  80 

Total  cost  per  ton .' 1  r-1 

Or,  for  a  bale  of  cotton,  say 4t> 

The  example  here  given  illustrates  the  fact  that  business  obtained 
by  competition,  even  at  low  rates,  assists  to  lighten  the  burden  of  those 
who  must  pay  local  rates.;  also  how  it  may  be  profitable  for  a  railroad 
company  to  offer  reduced  rates  for  shipments  with  which  cars  may  be 
returned  loaded  to  destination,  which  would  otherwise  go  back  empty. 

I  have  been  careful  to  state  that  this  illustration  applies  only  to  the 
specific  cost  of  transportation  of  competitive  freight ;  that  is,  the  point 
below  which  such  freight  cannot  be  taken  except  at  the  expense  of  local 
shippers. 

With  local  business  the  conditions  are  different.  The  local  freight 
and  passenger  business  must  between  them  maintain  a  road  which  has 
no  other  resource's.  Each  class  of  business  should  bear  its  own  ex- 
penses and  its  proportionate  share  of  expenses,  which  cannot  be  spe- 
cifically divided.  Jf  the  revenue  of  a  road  be  obtained  70  per  cent. 
from  freight  and  30  per  cent,  from  passenger  business,  then  these  joint 
expenses  might  be  charged  proportionately  to  each  class  of  business. 
In  this  way  it  might  be  determined  whether  the  net  revenue  of  a  road 
was  obtained  disproportionately  from  either  source  of  revenue,  and  the 
rates  be  readjusted  accordingly,  forbearing  to  unduly  advance  rates  on 
staple  products. 

I  have  endeavored  to  indicate  in  a  general  way  the  elements  of  cost 
and  the  conditions  of  business  that  should  be  considered  in  fixing  inter- 
state tariffs,  according  as  the  traffic  is  or  is  not  competitive.  I  assume 
that  Congress  would  not  attempt  to  evolve  a  general  interstate  tariff 
out  of  its  own  consciousness.  < 

•    My  whole  argument  has  tended  to  show : 

(1)  That  uniformity  of  classification  is  desirable;    how  it  has  been 
attained  and  may  be  modified  as  required  without  legislation. 

(2)  That  uniformity  of  rates  is  not  desirable. 

(3)  That  just  and  reasonable  rates  on  competitive  business  can  best 
be  determined  by  contract  between  shipper  and  carrier,  not  to  be  fixed 
below  the  specific  cost  of  transportation. 

(4)  That  the  legal  enforcement  of  contracts  between  railroad  com- 
panies to  maintain  rates  is  the  best  method  to  regulate  such  rates  in  the 
interest  of  all  shippers,  competitive  and  local,  of  all  stockholders  and 
creditors  of  railroad  corporations  and  of  the  public. 

(5)  That  the  rights  of  local  shippers  do  not  call  for  any  further  inter- 
vention ot  law  as  to  rates  on  competitive  business  than  is  stated  in  the 
above  propositions. 

(G)  That  the  local  business  of  a  railroad  must  maintain  it  with  such 
assistance  as  may  be  obtained  from  the  profits  derived  from  competitive 


140  INTERSTATE    COMMERCE. 

traffic,  and  that  the  rates  on  local  business  must  be  fixed  with  this  cal- 
culation in  view. 

(7)  That  rates  on  local  staple  products  should  be  so  fixed  as  not  to 
depress  such  industries,  and  should  fluctuate  within  certain  limits  with 
tbe  variation  of  profits  derived  from  them. 

(8)  That  certain  classes  of  discrimination  on  local  rates  are  just  and 
reasonable. 

(9)  That  intentional  discriminations  between  individuals  should  be 
made  criminal  offenses. 

I  wish  that  it  were  practicable  to  give  specific  rules  for  making  a 
local  freight  tariff  out  and  out,  but  this  cannot  be  done.  We  can  only 
take  the  several  tariffs  as  they  exist  and  modify  them  here  and  there 
as  the  intelligent  application  of  facts  inaj  justify.  This  is  a  work  which 
cannot  be  done  either  by  act  of  Congress  or  by  a  commission ;  the  field 
is  too  large  and  the  variety  of  conditions  too  great.  The  modification 
of  local  tariffs  had  best  be  left  to  the  shipper  and  the  carrier,  to  the  in- 
fluence of  the  press  and  to  public  opinion,  enlightened  continually,  as  it 
will  be,  by  the  elevation  of  these  railroad  questions  to  prominence  among 
the  issues  of  the  day  and  the  discussions  that  will  thereby  be  occasioned. 

From  local  business  the  principal  net  revenue  of  most  roads  must 
come,  and  the  main  issue  between  local  shippers  and  the  railroad  man- 
agement will  be  the  equitable  adjustment  of  rates  among  the  local  ship- 
pers themselves. 

The  principal  points  to  be  observed  in  a  tariff  for  competitive  busi- 
ness are  to  insure  a  uniform  rate  to  all  shippers  similarly  situated, 
which  shall  be  above  the  specific  cost  of  transportation.  Under  this 
head  of  specific  cost  should  be  included  the  maintenance  of  all  struct- 
ures and  appliances  rendered  necessary  by  this  very  competition,  such 
as  grain  elevators,  terminal  docks  and  yards,  the  third  and  fourth  track 
of  a  trunk  line,  and  perhaps  one  track  of  a  double  track  road. 

I  have  not  included  the  expenditures  for  betterments  among  the  items 
entering  into  the  cost  of  transportation.  They  should  properly  be  a 
charge  to  capital  account,  and  be  represented  by  bonds  or  stock.  Ad- 
ditions to  property  which  do  not  result  in  reduced  expenses  or  increased 
business  are  poor  investments,  and  the  money  so  spent  had  better  been 
divided  among  the  stockholders  if  taken  from  net  revenue,  or  if  ob- 
tained as  a  loan,  then  the  increase  in  the  fixed  charges  must  diminish 
dividends  or  prove  an  additional  burden  to  local  traffic. 

SIXTH  ANSWER. 

u  Should  any  system  of  rebates  and  drawbacks  be  allowed  ?  If  so, 
should  such  transactions  be  regulated  by  law  and  be  subject  to  official 
inspection  or  approval,  or  should  they  be  entirely  prohibited?" 

The  replies  to  former  questions  present  my  views  upon  secret  rebates, 
but  cases  may  occur  where  rebates  could  properly  be  allowed  under 
suitable  provisions  for  publicity  and  for  uniform  application.  The  sug- 
gestion that  coal  for  manufacturing  purposes  should  be  transported  at 
or  about  the  cost  of  performing  the  service,  as  made  by  the  Massachu- 
setts railroad  commission,  is  a  case  in  point.  If  this  suggestion  were 
to  be  put  in  practice  it  would  be  difficult  to  determine  at  the  time  the 
coal  was  transported  which  shipment  was  for  manufacturing  purposes 
and  which  was  not ;  but  provisions  could  be  made  for  a  rebate  upon  the 
amount  that  a  manufacturer  could  show  had  really  been  consumed  by 
him  in  that  way.  The  system  of  custom-house  rebates  is  apparently 
based  upon  similar  considerations.  It  is  questionable  whether  Con- 


INTERSTATE    COMMERCE.  141 

gress  should  interfere  iu  regulating  such  reasonable  rebates  or  in  sub- 
jecting such  transactions  to  official  inspection  and  approval.  Suitable 
publicity  would,  in  the  case  above  noted,  put  every  manufacturer  on 
notice  as  to  the  extent  of  the  rebate  and  the  conditions  under  which  it 
would  be  given,  and  if  any  one  consumer  of  coal  was  unduly  favored 
it  would  be  virtually  a  fraud  upon  his  rivals,  of  which  the  courts  could 
take  cognizance  through  a  civil  suit  for  damages  against  the  offending 
railroad  company. 

SEVENTH   ANSWER. 

The  seventh  question  as  to  the  advisability  of  legal  recognition  and 
regulation  of  pooling  contracts  and  agreements  has  been  substantially 
answered  iu  my  replies  to  the  questions  preceding  it.  I  have  no  doubt 
as  to  the  propriety  of  giving  legal  sanction  to  these  agreements  to  such 
an  extent  as  will  enable  one  of  the  parties  to  sue  the  other  party  for 
damages  growing  out  of  its  alleged  violation.  In  such  a  suit  the  terms 
of  the  agreement,  the  circumstances  under  which  it  was  made,  and  the 
purpose  it  was  intended  to  serve  would  all  be  exhibited  in  the  evidence 
and  the  arguments,  and  I  venture  to  say  that  two  or  three  such  suits 
carried  to  a  conclusion  would  serve  as  powerful  correctives  of  the  evils 
resulting  from  unrestricted  competition,  of  which  the  people  justly  com- 
plain. The  evidence  of  experts  which  would  be  given  in  such  suits, 
the  arguments  of  counsel,  and  the  opinions  of  the  court,  analyzed  and 
commented  upon  by  the  press,  as  they  would  be,  would  aid  largely  in 
bringing  the  public  to  an  intelligent  comprehension  of  the  issues  be- 
tween the  shipper  and  carrier;  issues  which  have  been  obscured  by 
parties  interested,  partly  from  design  and  partly  from  ignorance.  Be- 
yond such  legal  sanction  it  would,  in  my  opinion,  be  inadvisable  to  go 
in  the  direction  of  legislative  regulation  and  approval  of  agreements  to 
maintain  rates.  At  all  events  it  would  do  no  harm  to  stop  just  there 
until  some  experience  had  been  obtained  as  to  the  effects  of  the  experi- 
ment. 

EIGHTH  ANSWER. 

The  right  to  shippers  to  select  the  lines  and  parts  of  lines  over  which 
their  shipments  should  be  transported  is  indefeasible,  and  should  not  be 
restricted  by  legislation.  The  argument  made  by  the  trunk  lines  favor- 
ing its  restriction  is  invalid.  It  is  a  confession  of  their  lack  of  confidence 
in  their  own  good  faith  toward  each  other  in  the  maintenance  of  agree- 
ments to  maintain  rates,  and  furnishes  additional  evidence  of  the  value 
.of  a  legal  recognition  of  such  agreements.  If  the  trunk  lines  then 
choose  to  embody  in  their  contracts  among  themselves  a  condition  that 
shipments  should  be  diverted  at  their  pleasure,  the  courts  could  deter- 
mine the  rights  of  an  objecting  shipper.  Until  a  competent  court  de- 
.  cides  to  the  contrary  it  would  seem  that  these  rights  already  subsist  in 
the  shipper  without  further  legislation.  If  the  shipper  be  willing  to 
forego  them  for  a  valuable  consideration,  e.  </.,  a  reduced  rate,  that  is  a 
matter  for  a  contract  between  him  and  the  carrier. 

NINTH   ANSWER. 

A  uniform  system  of  rates  for  interstate  transportation  of  freight  and 
passengers  is  not  to  be  desired,  and  the  need  for  such  uniformity  is  not 
obvious.  Uniformity  is  y.n  obstacle  in  the  pathway  of  progress,  and  in 
a  country  of  varied  topographical  features  and  industrial  resources  the 
attempt  to  regulate  every  man's  business  with  the  same  unit  of  meas- 


142  INTERSTATE    COMMERCE. 

urement  would  be  a  bar  to  its  accelerated  prosperity.  It  would  be  as 
well  to  require  both  corn  and  oil  to  be  measured  by  the  gallon. 

The  principles  upon  which  a  system  of  rates  should  be  based  is  an- 
other matter.  Such  principles  should  be  as  capable  of  application  to 
the  interstate  commerce  of  the  Pacific  slope  as  of  New  England,  and 
yet  the  manner  of  application  might  be  different.  As  I  have  previously 
stated,  there  are  two  elements  in  a  freight  tariff:  the  classification,  and 
the  charge  for  each  class.  The  classification  might  well  be  uniform  in 
the  main,  though  specially  varied  to  suit  local  conditions,  as  for  coal 
and  ore  in  a  mining  country,  or  for  lumber  in  a  forest  region.  But  this 
uniform  classification  should  not  be  petrified  by  law,  for  then  it  would 
soon  become  a  fossil  indeed.  m 

The  experience  of  the  Southern  JRailroad  and  Steamship  Association 
shows  that  its  uniform  classification  has  frequently  to  be  revise'!,  and 
in  the  public  interest.  The  rate  committee  of  that  association  holds 
frequent  meetings,  at  which  the  applications  of  shippers  for  the  modi- 
fication of  the  existing  classification  are  considered  and  acted  upon. 
The  modifications  determined  upon  are  specially  published  and  duly  in- 
corporated into  the  official  tariff.  A  revised  edition  of  this  tariff  is  then 
issued  by  the  general  commissioner  and  distributed  among  the  members 
of  the  association.  How  could  legislation  better  secure  a  uniform  sys- 
tem of  rates  for  interstate  commerce  ?  A  copy  of  the  latest  edition  is 
hereto  attached  (Exhibits  A  and  B).  Attention  is  asked  to  the  shades 
of  difference  which  are  recognized  in  the  classification  of  different  arti- 
cles. For  instance,  the  different .  kinds  and  parts  of  plows  are  classed 
in  nine  ways,  ale  in  seven,  and  furniture  in  thirty-six.  This  minuteness 
of  detail  grows  out  of  the  efforts  of  the  association  to  conform  to  the 
requirements  of  trade,  and  yet  this  association,  so  far  from  having  legal 
sanction,  is  seriously  threatened  with  penalties  as  an  unlawful  combi- 
nation conspiring  against  the  public  welfare. 

While  I  am  clearly  of  the  opinion  that  a  virtually  uniform  classifica- 
tion is  practicable,  and  have  pointed  out  the  way  to  secure  it,  I  am  as 
clearly  of  the  opinion  that  uniform  rates  are  not  only  undesirable,  but 
also  impracticable,  for  the  reason  that  the  rates  essential  to  the  existence 
of  a  railroad  in  one  part  of  the  United  States  would  be  oppressive  to 
shippers  elsewhere.  The  extent  to  which  uniformity  in  the  charges 
upon  each  class  is  practicable,  and  to  which  discrimination  is  just  and 
reasonable,  I  have  already  discussed  at  length. 

The  reference  in  the  seventh  question  to  uniformity  of  passenger 
rates  is  apparently  incidental,  and  I  have  not  attempted  to  consider  it. 

TENTH  ANSWER. 

Should  a  proportionately  lower  rate  be  permitted  for  a  long  haul 
than  for  a  short  haul?  Only  in  competitive  traffic,  for- the  reasons  and 
under  the  considerations  I  have  already  given. 

The  public  interest  requires  no  legislation  beyond  the  experiment  of 
legalizing  contracts  to  maintain  rates  upon  competitive  traffic. 

ELEVENTH  ANSWER. 

Concessions  in  rates  to  large  shippers  commend  themselves  to  minds  ac- 
customed to  advantages  claimed  by  wholesale  dealers  in  their  commer- 
cial transactions,  but  the  conditions  surrounding  transportation  contracts 
differ  in  some  respects  from  those  of  bargain  and  sale.  The  rights  of 
third  parties  are  different  in  the  two  cases.  As  between  buyer  and 


INTERSTATE    COMMERCE.  143 

seller,  the  larger  the  transaction  the  less  is  the  proportionate  expense 
attendant  upon  effecting  the  sale,  and  the  more  eager  is  the  seller  even 
at  a  small  margin  of  profit.  He  would  rather  make  5  per  cent,  on  one 
transaction  of  $10,000  than  0  percent,  upon  each  of  ion  transactions 
involving  $1,000,  or  7  per  cent,  upon  one  hundred  transactions  involv- 
ing $100  a  piece;  and  this,  too,  even  though  the  attendant  expenses  in 
each  case  were  the  same.  This  is  no  infringement  upon  the  rights  of 
others,  even  though  the  larger  buyer  has  consequent  advantage  over 
the  retail  dealer.  But  railroad  transportation  is  another  matter.  The 
expression  "selling  transportation"  is  sometimes  used,  as  if  it  were  the 
same  as  to  sell  coal  or  corn,  but  this  is  a  mistake,  liailroad  corpora- 
tions do  not  sell  transportation.  They  have  been  granted  a  franchise 
to  collect  tolls.  A  privilege  has  become  vested  in  them  ;  they  do  not 
possess  a  natural  right.  A  railroad  company  occupies  a  position  to- 
ward the  public  different  from  that  of  a  turnpike  company.  It  owns 
both  the  route  and  the  vehicle,  and  carriage  over  the  route  is  not  an 
occupation  free  to  all.  It  is  monopolized  by  the  owner  of  the  route. 
If  he  have  the  power  to  fix  the  price,  the  person  desiring  the  service 
performed  over  that  route  must  pay  it  or  not  obtain  the  service.  This 
is  true  if  the  service  must  necessarily  be  performed  over  that  route, 
but  if  there  be  another  route  between  the  same  points  then  the  person 
desiring  the  carriage  may  exercise  his  option. 

Here,  as  elsewhere,  we  are  met  by  the  distinction  between  that  traffic 
which  is  competitive  and  that  which  is  not.  If  there  be  alternate  routes 
then  the  relation  between  shipper  and  carrier  as  to  rates  of  carriage  is 
largely  a  matter  of  contract;  but  when  there  is  not  an  alternate  route 
this  relation  is,  if  1  may  use  the  expression,  more  a  matter  of  status ;  and 
the  shipper  is  therefore  more  entitled  to  invoke  the  aid  of  the  law  in  de- 
fining that  relation.  But  he  stands  in  the  relation  of  a  third  party  to 
contracts  between  carriers  and  shippers  of  competitive  freight,  and  the 
State  ought  not  to  interfere  in  such  contracts  for  his  benefit,  except  so 
far  as  his  rights  may  therein  be  affected.  It  is  not  right  to  add  anything 
to  the  charges  upon  his  shipments  to  offset  losses  upon  transporting 
competitive  freight,  and  his  rights  are  affected  by  any  competitive  rates 
which  are  below  the  specific  cost  of  transporting  the  articles  offered  for 
shipment  to  rival  roads.  As  between  shipments  of  competitive  freights 
offered  in  different  quantities,  there  seems  no  necessity  for  legal  enact- 
ments beyond  requiring  suitable  publicity  of  the  conditions  under  which 
such  shipments  are  made.  A  civil  suit  for  damages  would  probably 
protect  any  shipper  suffering  by  a  secret  departure  from  those  conditions 
in  favor  of  a  rival.  All  else  might  well  be  left  to  agreement  between 
the  shipper  and  carrier.  It  may  be  asserted  that  this  would  be  discrim- 
inating greatly  to  the  advantage  of  the  dealer  or  manufacturer  at  com- 
petitive points,  and  against  the  dealer  or  manufacturer  at  points  where 
there  is  no  competition,  and  such  an  assertion  might  be  correct.  But 
how  does  this  discrimination  arise?  It  arises  from  difference  in  geo- 
graphical position  as  affecting  facility  of  transportation.  Cities  with 
safe  harbors,  convenient  of  access  by  sea  and  at  the  mouths  of  naviga- 
ble rivers,  or  adjacent  to  practicable  mountain  passes,  became  centers  of 
trade  in  prehistoric  times,  and  the  same  conditions  for  the  facility  of 
transportation  continue  to  concentrate  commerce  at  such  places.  With 
the  invention  of  the  locomotive  and  the  iron  rail  they  began  to  supplant 
the. turnpike  and  the  wagon  ;  they  were  first  used  where  they  were  most 
wanted,  where  the  greatest  traffic  already  existed — as,  for  instance,  be- 
tween Liverpool  and  Manchester,  and  between  New  York  and  Philadel- 
phia. The  gradual  extension  of  the  railway  systems  resulted  in  railroads 


144  INTERSTATE    COMMERCE. 

meeting  or  crossing  each  other,  and  competitive  traffic  was  established 
at  such  junction  points  which  occasionally,  as  at.  Atlanta,  became  large 
cities.  Railroad  corporations  have  not  originated  the  discrimination  in 
favor  of  competitive  traffic  and  against  local  traffic.  It  existed  before 
they  did,  and  the  economic  law  of  supply  and  demand  compelled  them 
to  recognize  it. 

But  as  between  local  shippers  the  case  is  different.  The  railroad 
company  ought  not  to  discriminate  between  them  except  when  such 
discrimination  can  be  shown  to  be  just  and  reasonable.  As  I  have  al- 
ready shown,  it  is  just  and  reasonable  to  discriminate  between  ship- 
ments in  different  quantities  of  the  same  article  where  by  reason  of  the 
increased  quantity  the  specific  cost  of  the  transportation  is  proportion 
ately  lessened.  It  is  generally  accepted  that  this  is  true  of  car-load 
shipments;  it  is  probably  as  true  of  train-load  shipments,  and  especially 
when  business  for  a  train  is  insured  for  a  considerable  period  of  time. 
There  are  most  likely  other  causes  in  which  such  discrimination  might 
justly  be  made.  It  may  be  laid  dowii  as  a  general  rule  that,  as  between 
local  shippers,  no  distinction  in  rates  for  quantity  should  be  made  un- 
less the  specific  cost  of  transportation  be  proportionately  lessened. 

TWELFTH  ANSWER. 

A  uniform  system  of  accounts  for  railroad  corporations  would  be,  to 
my  mind,  as  undesirable  as  a  uniform  system  of  rates,  and  for  the  same 
reasons :  First,  that  a  perfect  system  of  railroad  accounts  has  not  yet  been 
devised;  and,  next,  that  "circumstances  alter  cases,". and  the  elaborate 
system  which  is  required  for  setting  the  multifarious  affairs  of  the 
Pennylvania  Railroad  Company  properly  before  its  stockholders,  if  ap- 
plied to  the  affairs  of  a  mfnor  corporation,  would  be  like  a  giant's  armor 
upon  a  dwarf.  The  accounts  of  a  railroad  company  are  intended  pri- 
marily for  the  protection  and  information  of  its  stockholders,  and  should 
be  as  free  from  the  interference  of  any  one  else  as  the  accounts  of  any 
other  corporation  or  of  a  private  individual.  If  the  rights  of  a  third 
party  are  affected  by  the  manner  in  which  they  are  kept  there  are  ample 
precedents  for  having  them  produced  in  court  and  suitably  explained. 
It  is  difficult  to  understand  how  the  interests  of  persons  engaged  in  in- 
terstate commerce  could  be  affected  by  the  manner  in  which  the  ac- 
counts of  corporations  are  kept  which  are  engaged  in  such  commerce, 
and  it  does  not  seem  necessary  for  their  protection  that  Congress  should 
require  such  corporations  to  adopt  a  uniform  system  of  accounts. 

THIRTEENTH  ANSWER. 

Corporations  engaged  in  interstate  commerce  might  well  be  required 
to  make  annual  reports  to  the  Government.  It  is  the  right  of  the  pub- 
lic, stockholders,  creditors,  and  shippers  to  be  informed  as  to  their 
operations,  ,and  the  publication  of  such  information  would  serve  to  cor- 
rect erroneous  impressions  concerning  them. 

These  reports  should  only  contain  such  information  as  the  public 
might  rightfully  demand  as  stockholders,  creditors,  and  shippers. 
Nothing  should  be  conceded  to  idle  curiosity  or  to  thirst  for  scientific, 
statistics.  The  one  deserves  rebuke,  and  the  other  does  nor  warrant  an 
unwelcome  intrusion  into  the  affairs  of  a  railroad  corporation  any  more 
than  into  the  affairs, of  a  private  citizen.  But  such  information  as  the 
public  may  rightfully  require  of  a  railroad  corporation,  that  informa- 
tion an  annual  report  to  the  Government  should  contain,  within  certain 


INTERSTATE    COMMERCE.  145 

limits.  The  limit  as  to  information  for  stockholders  would  seein  to  be 
fixed  by  the  right  of  .minority  of  stockholders  to  obtain  such  informa- 
tion. A  majority  interest  could  obtain  any  information  at  an  annual 
meeting,  but  not  so  with  the  minority.  The  latter  would  seem  to  be 
entitled  to  know  the  financial  condition  of  the  company  without  resort- 
ing to  a  court  of  equity,  and  therefore  such  information  as  to  the  amount 
respectively  of  the  various  issues  of  bonds  and  stocks,  and  of  the  float- 
ing debt,  the  income  account,  and  the  assets  and  liabilities,  could  prop- 
erly be  called  for  in  a  prescribed  form  so  simple  as  to  admit  of  no  mis- 
construction. The  creditors  of  the  company  would  find  in  such  a  state- 
ment all  the  information  which  they  could  rightfully  require.  The 
rights  of  shippers  pertain  rather  to  statistical  information,  especially 
as  to  tonnage,  properly  classified  and  divided  as  competitive  or  other- 
wise, to  similar  information  as  to  passenger  business,  and  to  such  clas- 
sified statements  of  expenditures  as  would  throw  a  light  upon  the  cost 
of  transportation.  None  of  the  forms  required  by  the  State  commis- 
sions give  this  information  in  proper  form  for  such  use,  so  far  as  I  am 
aware.  Some  of  them  go  into  a  good  deal  of  irrelevant  detail,  and  some 
stop  short  of  the  right  point. 

FOURTEENTH   ANSWER. 

The  development  and  maintenance  of  a  system  of  water  routes  by 
the  Government  as  a  security  for  cheap  transportation  is  a  subject  of 
grave  importance.  The  United  States  has  been  for  many  years  com- 
mitted to  the  policy  of  maintaining  and  improving  natural  waterways. 
It  has  been  looked  upon  as  a  matter  of  general  public  interest  in  which 
private  capital  could  not  be  profitably  invested,  since  no  tolls  could  be 
collected  from  the  traffic  over  such  routes.  But  in  the  question  as 
stated  in  the  committee's  circular,  the  development  of  a  system  of  water 
routes  to  secure  cheap  transportation  seems  to  look  to  the  construc- 
tion of  canals  intended  specially  for  competition  with  the  railroad  sys- 
tems of  the  country — systems  controlled  by  private  enterprise  which 
have  reduced  the  charges  upon  interstate  commerce  to  such  an  extent 
that  the  Erie  Canal  could  not  hold  its  own  in  the  contest.  That  great 
water  route,  constructed  at  the  expense  of  the  tax-payers  of  New  York, 
is  now  also  maintained  at  their  expense.  Would  it  be  right  for  Cou- 
,ut"ss  to  follow  this  example,  to  throw  the  financial  strength  of  the 
Tinted  States  into  the  scales  against  the  capital  of  individuals,  of  es- 
tates of  widows  and  orphans  invested  in  railroad  property  i  The  con- 
test  for  competitive  traffic  between  the  subsidized  canal  and  the  unpro- 
tected railroad  to  which  it  is  parallel  will  be  fierce  for  awhile,  but  the 
i>sue  will  not  be  doubtful.  Shipments  by  the  canal  will  not  have  to 
pay  any  part  of  the  interest  on  the  original  investment  in  its  construc- 
tion, nor  for  maintaining  it.  They  will  only  have  to  contribute  to  oper- 
ating  and  maintaining  the  canal-boats.  Whatever  the  rate  may  be  by 
canal  that  will  be  the  rate  by  the  competing  railroad,  unless  shippers 
be  willing  to  pay  a  little  higher  rate  for  greater  dispatch.  Whatever 
that  rate  may  be  it  is  not  supposable  that  there  will  be  any  considera- 
ble margin  above  the  specific  cost  of  transportation — that  is,  that  it 
will  contribute  anything  towards  the  general  maintenance  of  the  rail- 
road or  towards  the  interest  upon  the  investment.  It  is  much  more 
probable  that  the  rate  by  the  highly-favored  canal  will  be  reduced  be- 
low the  actual  cost  incurred  by  the  railroad  for  transporting  such  com- 
petitive freight,  and  that  the  resulting  loss  will  be  made  good  from  the 

10232  AP 10 


146  INTERSTATE    COMMERCE. 

net  revenue  from  local  business ;  and  residents  along  the  road  inter- 
ested in  local  business  will  not  only  pay  higher  local  rates  in  order  to 
maintain  this  competition,  but  will  make  a  further  contribution  for  the 
benefit  of  their  fellow-citizens  to  the  extent  that  they  are  indirectly 
taxed  to  build  and  maintain  these  canals.  The  alternative  is  for  the 
railroad  companies  to  withdraw  from  the  com  petition  and  leave  the  car- 
riers by  canal  to  fix  their  own  rates  for  such  service.  It  is  possible  that 
competition  might  be  carried  ou;to  such  an  extent  as  to  bankrupt  the 
railroad  corporations,  and  we  should  then  have  the  spectacle  presented 
to  us  of  the  wealth  and  power  of  the  people  of  the  United  States  being 
employed  to  bankrupt  one  class  of  citizens  for  the  benefit  of  another, 
which  would  be  class  legislation  indeed.  When  we  consider  the  great 
reduction  in  the  rates  upon  competitive  traffic  which  has  been  brought 
about  by  the  railroad  corporations  of  this  country,  it  would  seem  that 
such  treatment  of  them  would  accord  with  the  proverbial  ingratitude 
of  republics. 

I  have  already  shown  that  it  is  not  necessary  for  Congress  to  come 
down  into  the  arena  of  competitive  traffic  as  a  combatant  for  the  pur- 
pose of  protecting  such  traffic  against  unwarrantable  railroad  combi 
nations.    The  geographical  features  of  our  great  country  render  this 
unnecessary. 

On  the  one  hand,  the  great  chain  of  lakes  which  feed  the  Saint  Law 
reuce  River,  and  which  are  connected  by  the  Erie  Canal  with  the  com- 
mercial metropolis  of  the  United  States;  on  the  other,  the  Father  of 
Waters,  reaching  out  his  arms — the  Eed  River,  the  Arkansas,  the  Mis- 
souri, the  Upper  Mississippi,  the  Ohio,  the  Tennessee,  the  Cumberland 
River.  These  two  great  natural  water  routes  not  only  led  the  way  to 
our  commercial  prosperity  while  railroads  were  yet  unborn,  but  they 
still  exist  to  protect  it  against  the  combined  attacks  of  greedy  railroad 
stockholders.  There  are  other  natural  waterways,  which  in  a  lesser 
degree  serve  for"  such  protection  for  interstate  commerce.  The  Con- 
necticut, the  Hudson,  the  Delaware,  the  Potomac,  the  Savannah,  the 
Apalachicola,  the  Alabama,  on  the  Atlantic  slope,  and  the  Columbia 
on  the  Pacific  slope,  are  instances  in  point;  and  "pour'd  round  all,  old 
ocean's  gray  and  melancholy  waste"  unites  them  in  one  grand  combi- 
nation, against  which  the  puny  opposition  of  railroad  pools  shall  not 
prevail. 

FIFTEENTH  ANSWER. 

The  thread  of  argument  which  has  run  through  my  replies  to  the  prfs- 
vious  questions  indicates  my  views  as  to  the  extent  to  which  interstate 
commerce  should  be  regulated  by  legislation.  The  fifteenth  and  last 
question  asks  how  such  legislation  could  best  be  enforced.  I  have 
asserted  that  the  great  evil  is  the  reduction  of  the  charge  upon  cori- 
petitive  traffic  below  the  cost  of  performing  the  service ;  that  this  is  an 
evil  not  only  to  the  competitive  shippers,  by  reason  of  secret  rebates, 
but  also  to  the  local  shippers,  who  have  to  make  good  whatever  is  lo  *t 
to  the  railroad  companies  through  unrestricted  competition  ;  that  it 
should  be  lawful  for  railroad  companies  to  restrict  competition  by  agree- 
ment, and  that  such  contracts  should  be  enforced  as  other  lawful  con- 
tracts are  enforced.  Where  interstate  commerce  is  not  competitive, 
unjust  discrimination  should  be  defined  in  a  simple  way,  and  such  legis- 
lation as  may  be  necessary  for  this  purpose  shonld  includs  provisions 
Jbr  its  enforcement  in  the  courts. 

Legislation  within  the  limits  here  suggested  would  not  require  the 


INTERSTATE    COMMERCE.  147 

establishment  of  a  commission  or  other  special  tribunal  to  execute  it. 
This  would  seem  to  be  a  merit  rather  than  a  fault  in  law-making  of  a 
confessedly  experimental  or  tentative  character.  If,  after  sufficient 
trial,  it  should  not  accomplish  all  that  was  expected  of  it,  there  would  be 
no  false  step  to  retrace,  no  irretrievable  damage  to  investments  through 
blundering,  but  the  experience  thus  acquired  at  small  expense  would 
serve  to  indicate  the  right  direction  and  extent  for  additional  legisla- 
tion. 


W.  G.  EAOUL'S  STATEMENT. 

Statement  of  W.G.  Raoul,  of  Savannah,  president  of  the  Central  Railroad 
and  Banking  Company,  of  Georgia. 

*  Before  beginning  to  answer  the  questions  in  their  order,  I  will  say,  in  a 
general  way,  that  my  study  of  the  subject  of -railway  transportation, 
and  the  extent  to  which  the  State  can  properly  and  economically  exert 
an  influence  upon  it,  impresses  me  with  grave  doubts  of  the  existence  in 
the  present  status  of  railway  affairs  of  any  middle  ground  between  free- 
dom of  action  on  the  part  of  the  owners  of  the  roads  in  conducting  their 
business  and  State  ownership,  or  a  guarantee  of  profits  by  the  State, 
which  would  practically  be  ownership,  and  possibly  more  objectionable 
in  its  character  than  outright  ownership.  *By  freedom  of  action  I  mean, 
of  course,  only  such  freedom  as  may  be  given  under  the  general  and 
common  laws  of  the  country  to  do  business  in  a  proper  and  legitimate 
manner,  not  license,  but  absolute  freedom  from  specific  interference  with 
rates  of  transportation  and  legitimate  methods  of  business  pertaining 
to  transportation.  • 

liailroads,  being  as  they  are  such  vast  improvements  over  all  plans 
and  systems  of  highways  of  the  past,  would  appear  to  be  established  as 
the  permanent  means  upon  which  we  are  to  rely  for  the  inland  carrying 
business  of  the  country,  and  an  absolute  necessity  to  modern  civiliza- 
tion. Being  a  necessity,  we  must  have  them,  and  to  have  them  we  must 
pay  for  them  and  their  use  as  other  things  we  have  and  use  are  paid  for. 
Admitting  this,  it  next  becomes  a  question  of  the  best  and  surest  means 
for  securing  the  construction  of  the  roads  necessary  for  the  conduct  of 
the  business  of  the  country,  and  the  easiest  and  most  equitable  plan  of 
distributing  the  burden  of  their  maintenance  among  the  people  to  meet 
whoso  necessities  they  were  built. 

We  decided  from  the  beginning,  and  have  since  continued  to  pursue 
the  policy  of  relying  upon  private  capital  to  build  the  roads  as  fast  as 
needed  by  the  country,  the  inducement  for  such  investments  being  the 
hope  of  profit.  We  have  up  to  this  time  endeavored  to  distribute  the 
burden  of  cost  and  maintenance  among  the  people  who  iise  the  roads  by 
what  might  be  called  a  direct  tax  upon  everyone  who  uses  them  in  pro- 
portion to  the  extent  of  that  use.  The  object  of  change  can  only  be  the 
reduction  of  cost,  and  the  ad  option  of  some  better  method  of  distributing 
the  burdens  their  cost  and  maintenance  impose.  The  burdens  never 
can  be  reduced  below  cost  and  maintenance ;  distribute  them  as  we  may, 
they  must  be  borne.  If,  and,  as  I.  apprehend,  it  is  true,  the  income  of  the 
railways  of  the  country  does  not  exceed  the  interest  on  the  money  neces- 
sary lor  their  construction  and  cost  of  maintenance,  then  the  question  ig 
only  one  of  distribution  of  burdens. 


148  INTERSTATE    COMMERCE. 

THE   DISTRIBUTION   OF   BURDENS. 

It  will  be  answered  that  discrimination  is  also  a  question.  Discrim- 
ination is  only  a  feature  in  the  one  question;  If  to  avoid  discrimination 
by  making  a  more  uniform  system  of  charges  it  reduces  the  income  of 
the  roads,  we  must  weigh  in  the  balance  one  against  the  other,  deter- 
mine which  is  the  easiest  to  be  borne,  tariff  for  revenue,  which  will  sup- 
port the  roads,  or  tariffs  for  the  avoidance  of  discrimination,  which  will 
not  support  them,  and  decide  upon  one  or  the  other,  and  upon  whom 
the  burdens  imposed  by  a  change  of  policy  shall  fall,  for  either  must  be 
a  burden.  Left  as  it  is,  the  public  who  use  the  roads  must  bear  such 
discrimination  as  results  from  a  departure  from  the  system  of  uniform 
tariffs.  Adopt  a  uniform  tariff  system,  lessening  income  as  it  will,  and 
the  burden  will  fall  upon  the  comparatively  small  class  of  the  com- 
munity who  own  the  roads. 

It  will  scarcely  be  nrged  that  the  necessity  of  the  general  public  for 
a  uniform  tariff  system  can  become  so  great  as  to  warrant  its  beifig 
adopted,  if  it  must  be  done  at  the  expense  only  of  that  portion  of  the 
public  whose  money  is  invested  in  railroads.  If  it  must  be  done,  and 
not  at  the  expense  alone  of  those  who  use  the  roads,  but  from  broader 
considerations  be  distributed  over  the  whole  State,  those  owning  the 
roads  bearing  as  other  citizens  only  their  pro  rata  part,*  then  it  comes 
to  ownership  or  guarantee  of  profits  by  the  State.  Owned  by  the  Gov- 
ernment, a  uniform  system  of  freight  charges  and  reduced  number  of 
classifications  would  follow  as  a  logical  result,  and  put  the  maintenance 
of  the  roads  on  the  same  footing  as  that  by  which  the  postal  service  is 
maintained.  Those  persons  living  in  thickly  populated  sections  pay  to 
the  Government  an  enormous  profit  upon  the  mail  matter  over  the  cost 
of  carriage  and  handling.  Those  living  in  thinly  settled  sections  pay  far 
less  than  it  costs  the  Government  to  deliver  it — in  many  instances  a 
mere  tithe  of  the  cost.  Thus  would  result  a  uniform  tariff  for  railroads. 
Those  living  in  thickly  settled  and  prosperous  commercial  communities 
•would  be  heavily  taxed  to  support  cheap  transportation  for  those  living 
in  sparsely  populated  sections,  and  in  many  cases  struggling  in  a  com- 
mercial rivalry  with  those  who  are  being  taxed  beyond  the  cost  of  trans- 
portation in  order  to  support  a  system  of  transportation  for  their  rivals 
below  its  cost. 

UNRESTRICTED   COMPETITION. 

Had  the  feature  of  governmental  regulation  of  railroad  tariffs  been 
introduced  and  taken  into  consideration  at  the  time  of  the  granting  of 
the  first  charter,  I  can  conceive  how  the  State  might  then  have  so  in- 
fluenced location  and  encouraged  or  restricted  building,  or  have  laid 
down  conditions  both  for  itself  and  the  builders,  as  to  have  enabled 
them  to  have  assumed  some  intelligent  supervision  of  rates  without 
hardship  to  the  owners  of  the  roads,  and  with  good  results  to  the  pub 
lie  to  be  served  by  them.  I  can  see  how  useless  lines  could  have  been 
avoided,  how  useful  ones  might  have  been  forced,  how  competition  with 
all  the  evils  that  follow  in  its  track  could  have  been  avoided,  and  by  an 
intelligent  mapping  out  of  the  country,  responsibilities  laid  upon  the 
companies  assuming  to  construct  and  operate  those  highways  that  would 
have  alike  protected  their  owners  and  the  users  of  them.  However, 
with  such  a  system  adopted  at  the  beginning,  no  one  can  doubt  that 
more  than  a  century  would  have  elapsed  before  the  country  would 
have  been  as  well  supplied  with  railroads  as  it  has  now  become  under 
the  plan  we  have  pursued,  but  we  should  have  had  them  better  and 


INTERSTATE    COMMERCE.  149 

cheaper,  have  avoided  innch  useless  drain  npon  the  resources  of  the 
country  through  the  building  of  unnecessary  roads,  have  had  more 
perfect  systems  of  transportation,  which  would  have  been  satisfactory 
each  111  themselves,  and  not.  as  is  now  the  case,  a  standing  menace  to 
commercial  communities  from  the  changes  which  the  building  of  every 
new  line  now  threatens,  often  resulting  in  the  transfer  of  the  trade  and 
business  relations  of  large  sections  from  old  markets  to  new,  breaking 
down  values  in  the  old  to  build  them  upin  the  new.  which  yet  again  may 
be  in  turn  broken  down.  This  is  an  evil  of  unrestricted  railroad  build- 
ing— a  fundamental  evil,  which  results  in  unrestricted  competition, 
which  in  turn  results  in  discrimination,  of  which  the  public  complain. 
We  desired  railways  to  do  the  carrying  business  of  the  country.  We 
desired  them  through  the  expenditure  of  private  capital,  without  put- 
ting the  burden  of  debt  for  their  construction  upon  the  State.  We  de- 
sired them  in  competition  with  each  other  as  a  protection  against 
extortion,  and  we  have  secured  them  in  the  way  and  under  the  condi- 
tions we  thought  best.  We  may  now  speculate  as  to  whether  we  have 
paid  too  little  or  too  much  for  such  advantages  as  we  do  recognize  to 
have  flowed  from  the  rapid  but  uncontrolled  development  of  our  rail- 
way system.  At  all  events,  whatever  mistakes  may  have  been  made, 
they  are  no  more  the  mistakes  of  the  promoters  and  builders  than 
mistakes  of  those  who  permitted  and  encouraged  the  plan  upon  which 
'they  have  worked.  Therefore,  if  we  have  made  mistakes  that  now  call 
for  correction,  if  that  correction  involves  waste  and  loss,  we  cannot,  from 
a  moral  point  of  view,  put  it  alone  upon  those  who  now  own  railroad 
property  ;  but  as  all  are  alike  responsible,  all  should  alike  share  the  cost 
of  remedy.  Few  will  doubt  that  of  all  the  remedies  heretofore  tried  or 
suggested,  most,  if  not  all,  of  them  must  necessarily  work  a  restriction 
upon  the  earnings  of  the  roads,  and  disastrously  so  to  many.  It  is  these 
considerations  that  bring  me  to  the  doubt  I  have  expressed  as  to  the 
feasibility  of  any  interference  in  rates  except  under  a  guarantee  of  rea- 
sonable returns  to  those  whose  money  has  produced  the  property. 

DISCRIMINATIONS  THE   RESULT   OF   COMPETITION. 

(1)  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  discrimina- 
tion by  corporations  engaged  ill  interstate  commerce. 

As.a  fact,  the  practice  of  extortion  does  not  exist  as  a  rule  among 
railroads.  1  think  they  are  freer  from  this  charge  than  almost  any 
other  business  of  the  country.  There  may  be  isolated  cases  where  it  is 
practiced  to  some  extent,  but  they  are  very  limited,  and  I  cannot  say 
that  anything  of  the  kind  has  fallen  under  my  personal  observation. 
The  tact  that  the  total  railroad  capital  of  the  country  has  not  earned 
a  fair  interest  on  the  investment,  and  the  fact  that  the  rates  of  railroad 
transportation  for  the  past  twenty  years  have  constantly  and  continu- 
ously declined,  and  are  still  declining,  is  sufficient  to  prove  this.  With 
the  exception  of  certain  periods  when  railroad  rates  were  in  an  abnor- 
mal condition  through  the  effect  of  reactions  following  controversies  be- 
tween different  lines,  the  decline  has  been  continuous.  On  interstate 
rates  this  has  been  notoriously  so.  The  discriminations  complained  of 
by  the  public  are  the  results  of  competition,  and,  it  might  with  safety 
be  said,  of  competition  alone— competition,  he!  ween  the  roads  mostly  in 
their  own  interest  and  on  their  own  motion,  but  often  acting  from  a 
pressure  from  large  and  influential  communities  seeking  advantages 
over  a  commercial  rival.  We  have  taught  ourselves  to  rely  on  compe- 


150  INTERSTATE    COMMERCE. 

tition  for  relief  from  monopoly  and  extortion,  but  we  were  seeking  re- 
lief when  we  in  reality  needed  none,  and  the  means  adopted  for  the  re- 
lief has  brought  us  face  to  face  with  an  evil  of  immense  magnitude  and 
out  of  all  proportion  to  the  imaginary  one  of  monopoly  and  extortion. 
In  the  nature  of  things  extortion  would  have  cured  itself  or  have  been 
easily  dealt  with  by  legislation.  The  complaint  of  discrimination  is 
very  much  less  in  regard  to  interstate  business  than  to  State  business. 
It  usually  arises  from  a  disproportion  in  rates  for  the  carriage  of  goods 
for  long  distances  as  against  higher  rates  per  mile  for  carrying  goods 
from  one  point  to  another  in  the  same  State. 

The  latter  part  of  this  inquiry  is  the  most  difficult  one  to  answer  of 
any  in  your  list.  It,  in  fact,  embraces  the  problem  you  are  dealing  with. 
Its  satisfactory  solution  involves,  in  my  opinion,  the  entire  elimination 
of  the  principles  of  competition  in  the  sense  that  we  now  understand 
competition,  t.  e.,  a  competition  in  rates.  Just  to  the  extent  we  can 
modify  competition,  to  that  extent  can  we  decrease  discrimination. 
Therefore,  in  my  judgment,  the  first  step  in  the  case  is  the  study  of  the 
questions  of  competition  and  the  devising  of  some  plan  for  its  modifi- 
cation. 

(2.)  The  reasonableness  of  the  rates  now  charged  by  such  corporations  for  local  aud 
through  traffic. 

The  railroad  managers  have  recognized  the  necessity  of  working  their  ' 
roads  in  the  interest  of  the  public  as  far  as  practicable.  Selfish  inter- 
est would  prompt  this  if  no  higher  motive  existed,  as  it  secures  patron: 
age  from  their  friends  and  avoids  complaints  that  often  culminate  in 
experimental  legislation,  always  resulting  harmfully  to  revenues,  or  in 
embarrassment  and  confusion  in  the  conduct  of  business.  The  fruitful 
source  of  complaint  is  the  difference  between  what  is  called  through  or 
competitive  and  local  rates ;  naturally  so,  as  this  is  a  fruitful  (I  may  say 
the  only)  source  of  discrimination.  Obviously  it  is  desirable  to  modify 
if  we  cannot  entirely  remove  the  cause,  and  to  this  end  the  effort  of 
railroad  managers  has  been  to  bring  these  as  nearly  together  as  possi- 
ble ;  hence,  as  a  result,  the  cardinal  principle  for  making  rates  is  to 
secure  for  through  or  competitive  traffic  as  high  a  rate  as  the  competi- 
tion will  permit,  and  reduce  the  local  rates  to  the  lowest  point  compati- 
ble with  the  proper  maintenance  of  the  property.  It  may  be  asked  why 
they  should  not  be  placed  on  an  equal  footing,  and  the  same  rates  -per 
mile,  in  other  words,  the  uniform  tariff  system,  adopted.  I  have  already 
said  competitive  rates  were  made  as  high  as  the  nature  of  the  competi- 
tion would  permit ;  to  increase  them  would  result  in  a  decrease  of  that 
business  by  diversion  from  the  line  advancing  either  to  the  shorter  rival 
lines  reaching  the  same  markets  or  to  other  markets  served  by  other 
lines,  rail  or  water,  inviting  resistance  from  the  communities  from  which 
the  trade  is  diverted,  charges  of  discrimination  against  the  lino  losing 
the  traffic,  and,  if  the  aggrieved  community  is  strong  enough,  the  build- 
ing of  still  other  competitors,  and  would  leave  the  revenue  from  local 
business  inadequate  for  the  maintenance  of  the  road.  To  place  local 
rates  on  a  parity  with  the  through  would  result  in  the  same  way,  i.  e.r 
yield  less  than  a  sufficient  revenue  to  support  the  property.  The  vol- 
ume of  through  business  secured  over  a  line  enables  it  to  charge  a  low 
scale  of  local  rates.  The  allegation  that  the  roads  are  charging  extor- 
tionate rates  on  local  business  in  order  to  make  up  losses  on  through 
cannot  be  sustained,  except,  perhaps,  in  isolated  cases.  Some  absurd 
exceptions  to  usual  rules  may  always  be  looked  for,  but  such  as  these 


INTERSTATE    COMMERCE.  151 

are  short  lived  and  corrected  through  a  self-operating  principle.  The 
intelligence  of  railroad  management  has  progressed  boyond  that  point 
as  a  rule.  On  well  managed  roads  (and  most  of  the  roads  in  tin-  Tnited 
States  are  now  reasonably  well  managed)  the  rates  are  not  excessive 
on  either  through  or  local  traffic.  The  immense  development  of  through 
business  by  the  interchange  of  products  between  distant  parts  of  the 
country,  largely  brought  about  by  cheap  and  rapid  transportation,  has 
'been  a  potent  factor  in  working  a  reduction «iu  the  local  rates,  and  has 
made  a  scale  of  charges  possible  now  that  would  otherwise  have  been 
impossible  for  many  years  to  come,  the  cheapness  of  transportation  be- 
ing so  thoroughly  dependent  on  volume  of  business. 

(3)  Whether  publicity  of  rates  should  be  required  by  law,  whether  changes  of  rates 
without  public  notice  should  be  prohibited,  and  the  beat  method  of  securing  uni- 
formity and  stability  of  rates. 

PUBLICITY   IS  ESSENTIAL. 

Assuming  that  there  are  to  be  some  specific  laws  bearing  upon  the 
railroad  transportation  rates,  I  should  say  that  publicity  is  essential. 
Without  any  laws  to  fix  them,  rates  should  be  public,  because  there  is 
no  sound  business  reason  why  they  should  not  be,  and  every  reason 
why  they  should.  For  obvious  reasons  it  is  important  that  the  public 
should  be  equally  informed  in  regard  to  rates.  I  do  not  think  there 
should  be  any  restriction  upon  change  of  rates  without  public  notice. 
Assuming  or  assuring  that  the  rates  will  be  made  public  when  changed, 
there  would  be  no  necessity  to  trammel  the  roads  by  requiring  a  given 
notice  before  they  were  allowed  to  change.  The  necessity  for  changes 
sometimes  comes  very  suddenly,  and  prompt  action  is  necessary  to  ac- 
complish the  desired  result  to  be  effected  by  the  change.  The  best 
method  of  securing  uniformity  and  stability  of  rates  is  further  combina- 
tion among  railroads,  that  is,  enlargement  of  the  systems,  a  more  specific 
division  of  territory  for  the  express  purpose  of  modifying  competition, 
placing  larger  areas  of  country  under  the  control  of  responsible  com- 
panies, and  fixing  more  firmly  the  responsibility  for  efficient  and  proper 
service  upon  each  company,  and  in  pooling  (as  a  division  of  business 
is  now  commonly  called)  among  the  lines  that  are  under  separate  con- 
trol. The  public  are  perhaps  more  jealous  of  the  enlargement  of  the 
railroad  systems  of  the  country,  the  amassing  of  long  lines  and  many 
branches  under  single  control,  and  of  pooling  than  of  any  other  features 
in  railroad  development  and  management,  yet  I  am  forced  to  the  con- 
clusion th'at  these  of  all  others  will  work  more  rapidly  to  the  accomplish- 
ment of  the  desired  result,  that  is,  to  the  purpose  of  uniformity  and 
st  ability,  of  rates.  I  know  of  uoinstauce  where  the  combination  of  various 
lines  into  larger  systems  has  resulted  otherwise  than  in  a  reduction  of 
transportation'  charges  and  in  the  increased  facilities  and  improved 
methods  of  business.  They  are  managed  with  more  economy,  more  con- 
servatively, feeling  as  they  must  a  higher  responsibility  to  the  public, 
and  it  is  practicable  to  secure  a  higher  order  of  ability  in  their  manage- 
ment than  on  small  and  divided  lines,  and  modifying  competition  goes 
far  to  lessen  discrimination  which  is  inseparable  from  competition. 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
transportation  of  interstate  commerce. 

If  maximum  and  minimum  rates  were  established  by  law,  it  would  be 
found,  when  they  come  to  be  made,  that,  in  order  to  be  just  and  fair  to 


152  INTERSTATE   COMMERCE. 

all  the  transportation  companies  involved,  that  they  would  have  to  be 
made  between  such  wide  limits  that  it  would  practically  leave  the  ques- 
tion as  it  is  now.  The  Government  would  scarcely  venture  to  establish 
the  maximum  at  a  lower  rate  than  the  higher  rate  now  charged  on  in- 
terstate business,  which,  as  a  rule,  is  too  low,  nor  would  it  likely  fix  the 
minimum  higher  than  the  lowest  voluntarily  charged.  The  most  prolific 
source  of  trouble  and  dissatisfaction  is  the  abnormally  low  rates  result- 
ing from  wars  between  competing  lines.  Jt  increases  discriminations, 
disturbs  values,  invites  preferences  for  individuals  to  specially  favor- 
able yet  secret  terms,  creates  uncertainty  in  trade,  and  diverts  trade 
from  natural  channels.  To  counteract  this,  reductions  on  other  lines  in 
no  way  concerned  in  the  contest  are  enforced,  and  this  in  turn  creates 
other  discriminations,  besides  causing  loss  to  the  roads  on  which  the 
reduction  is  forced,  and  to  the  public  against  whom  the  reduction"  causes 
discrimination,  both  innocent  and  powerless  against  the  cause.  I  feel 
somewhat  confident  that  it  is  possible  to  devise  some  system  of  classi- 
fying the-liues  and  fixing  a  minimum  that  would  have  the  effect  of  at 
least  placing  a  limit  upon  reckless  competition  that  would  bear  good 
fruits.  To  enforce  such  a  system  penalties  would  be  necessary. 

(5)  The  elements  of  cost,  the  conditions  of  business,  and  the  other  factors  that  should 
be  considered  in  fixing  the  tariffs  on  interstate  traffic. 

To  establish  rates  intelligently,  and  with  a  view  to  a  fair  return  upon 
the  cost  of  the  property,  it  would  be  necessary  to  possess  a  knowledge 
of  all  the  conditions  that  in  any  way  influence  the  results;  for  instance, 
cost  of  construction,  cost  of  operating,  local  tonnage,  through  tonnage, 
character  of  tonnage,  direction  and  period  of  its  movement,  extent  to 
which  tonnage  is  subject  to  fluctuations,  liability  for  accidents  from 
natural  causes,  subjecting  traffic  to  interruption,  and  reliability  or  un- 
reliability of  the  products  upon  which  the  road  depends  for  its  traffic, 
and,  above  all,  some  familiarity  with  the  surroundings  and  characteris- 
tics, to  enable  the  rate-making  power  to  estimate  the  effect  given  rates 
would  have  in  increasing  or  diminishing  traffic  through  their  effect  upon 
business  enterprises,  or  diverting  traffic  from  or  to  other  sections,  and 
the  effect  upon  the  cost  of  carriage — the  increasing  or  diminishing  ot 
tonnage  resulting  from  the  effect  of  the  rates — would  exert. 

(6)  Should  any  system  of  rebates  and  drawbacks  be  allowed?    If  so,  should  such 
transactions  be  regulated  by  law  and  be  subject  to  official  inspection  or  approval;  or 
should  they  be  entirely  prohibited  ? 

I  think  that  any  law  regulating  the  conduct  of  the  business  of  the 
roads  should  prohibit  drawbacks  or  any  system  of  rebates.  Except  in 
rare  cases,  they  are  only  subterfuges  to  cover  the  real  rate  in  the  interest 
of  one  or  more  individuals  as  against  the  others.  Occasionally  a  spe- 
cially low  rate  is  made  in  consideration  of  a  large  amount  of  traffic, 
under  specific  condition.  To  insure  the  railroad  against  having  to  ac- 
cept the  low  rate  on.  a  lesser  amount,  or  on  different  conditions  than 
tjiose  agreed  upon,  a  certain  refunding  is  agreed  upon  to  be  paid  at  the 
end  of  the  shipments.  This  would  seem  to  be  legitimate  enough,  but 
only  for  such  reasons  as  this  do  I  think  it  warrantable,  and  this  is  as- 
suming that  it  is  proper  to  make  a  difference  in  rates  between  large  and 
small  shippers,  the  advisability  of  which  I  am  inclined  to  doubt.  If  a 
law  was  made  permitting  drawbacks,  it  should  be  subject  to  official 
approval  or  inspection.  My  judgment  is  decidedly  to  prohibit  it.  It  is 
unbusinesslike,  unsound  in  principle,  and  in  most  cases  is  prompted 
by  unfair  motives. 


INTERSTATE    COMMERCE.  153 

THE  POOLING  SYSTEM. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  doing  an  interstate 
business  be  permitted,  or  should  they  be  entirely  prohibited  by  law  f    If  they  should 
be  regulated  by  law  would,  it  be  sufficient  to  require  the  terms  of  such  agreements  to 
be  made  public  and  subject  to  official  approval? 

I  think  when  the  combination  of  various  roads  into  large  systems  has 
reached  its  limit  that  pooling  is  the  only  possible  means  left  for  adding 
to  the  uniformity  and  stability  of  rales.  Pooling  is  quite  as  much  in 
the  interest  of  the  commerce  of  the  country  as  in  the  interest  of  the 
roads.  The  public  has  become  prejudiced  against  it,  and  look  upon  it 
as  the  means  by  which  the  rates  are  to  be  raised  and  extortion  practiced. 
In  the  face  of  a  long  experience  with  lasting  and  permanent  pools,  the 
rates  have  continued  to  decline.  So  far  from  being  prohibitory,  if  they 
were  legalized  and  subject  to  approval  of  the  proper  authority,  and  re- 
cognized in  the  courts  as  all  other  contracts  are,  it  would  go  far  to  re- 
move, I  may  say,  the  only  real  grievance  of  the  public,  that  of  discrimi- 
nation. Pooling  is  simply  an  understanding  or  agreement  among  the 
roads  that  each  shall  take  a  certain  proportion  of  the  business  of  the 
territory  they  compete  for,  and  in  the  event  of  their  not  being  able  to 
divide  the  business  physically,  they  equalize  the  disadvantages  by  di- 
viding profits.  I  cannot  see  that  such  a  contract  should  of  necessity  be 
subject  to  official  approval,  yet  can  see  no  harm  in  such  a  provision. 
There  is  a  world  of  virtue  in  publicity. 

(8)  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  select 
lines  and  parts  of  lines  over  which  their  shipments  shall  be  transported  F 

THE  DIVERSION  OF  FREIGHT. 

Each  shipper,  of  course,  has  the  right  as  an  original  proposition,  to 
select  the  line  by  which  he  will  ship,  but  I  do  not  think  it  practicable 
to  give  him  the  right  of  selecting  parts  of  lines.  The  business  arrange- 
ments for  the  handling  of  freights  over  long  distances,  where  several 
transportation  companies  are  involved,  is  a  matter  of  no  small  conse- 
quence. The  necessity  for  excellent  methods,  honesty  of  purpose,  and 
energy  in  carrying  out  the  plans  is  important  to  the  successful  and 
proper  handling  of  goods.  This  can  only  be  secured  by  negotiating 
with  the  lines,  the  principal  line  having  the  right  to  select  their  con- 
nections and  treat  for  the  proper  handling  of  the  business  they  ex- 
change with  them,  the  assurance  of  larger  volume  of  business  being  the 
inducement  for  expending  the  money  usually  required  to  prepare  for  it. 
The  right  of  the  shipper  to  divert  this  from  parts  of  one  line  to  parts  of 
another  would  throw  goods  very  frequently  out  of  the  regular  chan- 
nel and  over  transportation  lines  perhaps  badly  managed  and  unpre- 
pared for  it,  which  must  result  in  confusion,  delays,  and  dissatisfaction. 
It  very  frequently  happens  that  there  are  short  links  competing  with 
links  in  long  lines  of  transportation,  and  these  getting  no  business,  not 
being  included  in  the  established  line,  would  establish  agencies  at  the 
principal  points  and  pay  rebates  of  drawbacks  to  shippers  as  induce- 
ments to  divert  their  business,  which  would  only  result  in  confusion  and 
prevent  the  possibility  of  effecting  a  perfect  system  of  transportation. 
Then,  again,  in  many  States  the  law  makes  any  road  in  a  line  liable  for 
the  loss, damage,  or  delay  of  freight,  treating  the  lines  over  which  the 
bill  of  lading  is  issued  as  partners,  and  holding  that  the  public  are  not 
interested  in  the  details  of  agreement  between  the  partners,  but  that 
any  of  them  must  respond  to  the  damage  the  shipper  has  ^sustained. 


154  INTERSTATE    COMMERCE. 


these  circumstances  the  shipper  would  have  the  right  to  select 
parties  who  were  to  be  held  as  partners  iu  the  responsibility,  and  yet 
thoroughly  irresponsible.  The  two  methods  would  be  incompatible. 
If  the  shipper  may  select  or  r*her  determine  the  make-up  of  his  line, 
the  laws  must  relieve  the  various  links  for  the  conduct  of  each  other 
and  free  each  road  as  it  frees  itself  by  receipt  from  it-;  connections. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  pas- 
sengers and  freights  by  all  the  corporations  engaged  in  interstate  commerce  be  best 
secured  f 

Absolute  uniformity  of  races  among  all  the  transportation  companies 
for  freights  will  be,  in  my  opinion,  impossible  to  establish.  It  can 
measurably  be  accomplished  through  more  extended  control  and  the 
system  of  pooling.  There  would  even  be  some  difficulty  and  unfairness 
in  forcing  uniformity  in  charges  for  passengers,  because  a  uniform  rate 
per  mile  would  place  the  short  lines  at  an  advantage  over  those  that 
were  only  a  slight  distance  longer,  and  divert  the  business  from  the 
long  lines,  and  deprive  them  of  considerable  revenue,  and  at  the  same 
time  deprive  the  public  of  the  choice  of  lines  at  equal  rates  which  they 
now  enjoy.  But  there  are  limitations  to  these  advantages  and  disad- 
vantages beyond  which  harm  comes,  first  to  the  roads  and  then  to  the 
public,  and  the  establishment  of  a  minimum  rate  would  be  of  great 
value  to  both. 

(10)  Should  corporations  engaged  in  interstate  commerce  be  permitted  to  charge  a 
lower  proportionate  rate  for  a  long  than  for  a  short  haul  ?     Does  the  public  interest 
require  any  legislation  on  that  subject  ? 

It  will  never  work  with  satisfaction  to  the  roads  or  the  public  to  en- 
force a  law  prohibiting  the  charging  of  lower  proportionate  rates  for 
long  hauls  than  for  short.  It  would  be  equally  damaging  to  the  roads 
and  the  public.  There  is  no  feature  in  railroad  management  more 
firmly  settled  in  the  conviction  of  that  portion  of  the  public  who  have 
not  studied  the  subject  with  some  care,  than  that  the  rates  should  be 
uniform,  and  that  there  should  not  be  proportionately  lower  rates 
charged  for  long  hauls  than  for  short  ones.  It  is  an  extensive  subject, 
and  more  far  reaching  than  is  generally  supposed.  It  involves  not  only 
the  profitableness  of  many  important  roads,  but  to  an  enormous  extent 
the  values  of  property  far  removed  from  the  sea-board.  It  is  the  oper- 
ation of  this  principle  iu  railroad  transportation  that  .has  done  more 
to  build  up  the  West  than  anything  else,  and  a  reversal  of  it  now  would 
change  values  beyond  what  we  can  possibly  conceive.  The  operation 
of  this  principle  makes  it  possible  to  utilize  lands  iu  the  far  West  for 
the  production  of  food  for  foreign  countries,  which  without  it  would  be 
of  little  value  except  to  leed  the  population  existing  upon  them  ;  but  it 
at  the  same  time  puts  distant  parts  of  the  country  in  competition  with 
the  home  industries,  decreasing  profits  to  these  various  industries  and 
trades,  yet  decreasing  prices  to  the  consumers.  This  in  itself  brings 
its  complaints  from  various  sources,  often  responded  to  by  legislatures, 
yet  seldom  analyzed  closely  enough  to  make  clear  the  principle,  the 
operation  of  which  is  causing  the  trouble. 

(11)  Should  any  concessions  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  such  concessions  be  made  known  to  the  public  f 

I  do  not  think  concessions  in  rates  made  to  larger  shippers  is  a  cor- 
rect principle.  There  is  a  difference  in  the  expense  of  handling  freight 
by  carload  lots  and  in  less  than  car-load  lots,  but  this  difference  is  very 
much  less  than  is  usually  supposed,  but  to  that  extent,  whatever  it  may 


INTERSTATE    COMMERCE.  155 

be,  between  a  car-load  and  less  than  a  car  load,  it  is  reasonable  and 
proper  that  difference  should  be  made,  but  I  can  see  no  reason  why 
there  should  be  a  difference  in  rates  charged  per  car  for  one  car,  or  for 
one  hundred  cars.  Such  differences  only  throw  great  advantages  in 
•'avor  of  the  large  dealers  as  against  the'  small  dealers,  and  have  the 
tendency  to  put  trade  in  fewer  hands,  which  1  do  not  believe  serves 
the  public  interest  l^est.  Whatever  concessions  of  this  kind  are  made 
should  be  i»s  much  a  matter  of  public  information  as  the  rates  them- 
selves. 

(12)  Should  corporations  engaged  in  interstate  commerce  be  required  to  adopt  a 
uniform  system  of  accounts  ? 

I  do  not  think  it  is  desirable  to  force  the  railroads  to  accept  one  uni- 
form system  of  accounts,  but  if  they  are  to  be  managed  and  controlled 
in  their  rates  and  methods  of  business  by  one  central  power,  this  will 
become  to  some  extent  a  necessity,  for  it  will  be  impossible  to  control 
intelligently  the  business  and  rates  of  a  road  without  a  full  knowledge 
of  its  condition  and  financial  affairs.  This  could  not  be  gained  by  one 
central  power  if  it  had  to  study  the  various  systems  of  accounts  as  con- 
ducted by  the  various  roads.  From  one  point  of  view,  a  uniform  system 
would  serve  many  advantages  under  all  circumstances,  but  upon  gen- 
eral principles  I  am  so  much  opposed  to  limiting  the  scope  and  actions 
of  individuals  that  I  think  we  could  forego  many  obvious  advantages 
for  the  indirect  benefit  that  results  from  every  citizen  being  allowed  to 
use  his  intellect  in  his  own  way  and  compete  with  all  others  for  better 
results.  It  encourages  originality  and  develops  ingenuity.  A  uniform 
system  of  statistics  and  classification  of  expenses,  defining  with  precis- 
ion what  items  could  enter  under  the  various  heads  of  expense  ac- 
counts, could  be  adopted  to  give  possibly  all  the  information  on  the 
subject  needed,  without  any  change  being  made  in  the  general  accounts. 
Quite  as  essential  as  uniformity  in  accounts  would  be,  it  occurs  to  me, 
the  fixing  of  one  day  for  the  termination  of  the  fiscal  year  of  all  com- 
panies. This,  however,  is  an  inquiry  requiring  for  intelligent  discussion 
far  more  thought  than  I  have  given  it.  , 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government?     If  so,  what  information  as  to  their  earnings,  expenses, 
and  operations  should  such  reports  contain  ? 

If  the  Government  is  to  control  the  rates  and  business  of  the  railroads 
it  must  of  necessity  not  only  have  annual  reports,  but  have  reports  more 
frequently.  T«  make  suggestions  as  to  the  character  and  scope  of  such 
re]  torts  would  be  the  work  of  very  serious  and  careful  consideration, 
and  scarcely  any  one  would  be  willing  to  outline  it  in  the  off-hand  and 
hasty  manner  in  which  I  am  answering  these  inquiries.  In  such  an  un- 
dertaking an  effort  should  be  made  to  secure  uniformity  between  the  sys- 
tem of  accounts  adopted  by  the  Government  and  those  adopted  or  to  be 
adopted  by  the  various  States,  for  the  passage  of  some  of  the  larger 
systems  through  several  States  would  (in  fact  does  now)  involve  a  con- 
fusion and  expense  almost  unbearable.  Uniformity  in  reports  to  the 
States  and  General  Government  would  indeed  be  a  welcome  feature  in 
governmental  requirements. 


(14)  In  li-aking  provision  for  securing  cheap  transportation  is  it  or  is  it  not  import- 
ant that  the  Government  should  develop  and  maintain  a  system  of  water  routes  I 

I  can  see  no  more  reason  why  the  Government  should  develop  and 
maintain  a  system  of  water  routes  for  the  purpose  of  securingcheap  trans- 
portation than  t  hat  it  should  build  parallel  railroads.  The  idea  of  main- 


156  INTERSTATE    COMMERCE. 

tainiug  the  water  routes,  not  needed  in  themselves,  is  based  upon  the 
principle  of  competition,  the  reduction  their  competition  would  enforce 
upon  the  rail  routes.  If  that  principle  is  sound,  and  opening  and  main 
taining  water  routes  is  justifiable,  the  building  of  railroads  would  be 
more  so,  because  the  water  route  would  be  of  little  value  except  to  force 
rates  down  by  rail  between  distant  points,  and  the  public  would  use 
the  rail  in  preference  to  water  routes ;  therefore,  if  there  is  a  neces- 
sity for  such  a  policy,  it  would  be  better  that  the  money  be  spent  in 
building  this  competing  line  in  a  way  that  would  serve  the  public  best. 
.We  cannot  doubt  that  railroads  would  do  this,  for  we  see  railroads  built 
parallel  to  some  of  the  finest  water  routes  in  the  country  and  taking  the 
traffic.  There  are  instances  in  this  State  of  water  routes  that  were 
pmctically  forced  out  of  use  twenty-five  years  ago  by  competition  with 
railroads  in  their  then  imperfect  state.  Eivers  that  were  filled  with 
steamboats  and  other  craft,  and  transporting  the  bulk  of  the  produce, 
are  now  without  any  transportation  facilities  upon  them.  It  will  never, 
in  my  opinion,  be  wise  to  expend  money  for  the  purpose  of  creating 
competition  in  transportation.  It  is  a  misapprehension  of  the  cause  of 
the  trouble  to  suppose  such  a  remedy  will  reach  the  real  evil. 

(15.)  In  what  manner  can  legislation  for  the  regulation  of  interstate  commerce  be 
best  enforced  ?  Should  a  commission  or  other  special  tribunal  be  established  to  carry 
out  the  provisions  of  any  law  Congress  may  enact  ? 

If  the  laws  proposed  to  regulate  the  transportation  business  of  the 
country  are  conservative,  based  upon  business  principles,  do  justice  to 
the  railroad  companies,  and  permit  them  to  pursue  their  business  with 
reasonable  hope  of  profit  and  reasonable  freedom  from  embarrassment, 
there  would  be  no  difficulty  in  enforcing  them.  The  roads  will  co-oper- 
ate thoroughly  and  cheerfully  to  the  end  of  their  successful  operation. 
I  do  not  think  it  practicable  to  regulate  rates  under  arbitrary  laws,  and 
if  any  method  can  succeed  it  must  be  through  a  commission  with  some 
elasticity  in  its  methods. 

The  chief  difficulty  of  dealing  intelligently  and  justly  with  the  rail- 
road question  is  from  the  fact  that  neither  the  General  Government  nor 
the  States  possess  jurisdiction  over  all  character  of  business  of  all  the 
railroads ;  but  for  this,  some  comprehensive  plan  might  be  devised  for 
the  modification  of  discrimination  through  the  modification  of  competi- 
tion; and  to  guard  the  public  against  a  decrease  of  facilities  and  unfair 
increase  of  rates,  which  might  follow  were  the  pressure  of  competition 
and  the  fears  of  adverse  State  legislation  removed,  it  might  be  possible 
to  fix  a  maximum  percentage  upon  investment  beyond -which  the  rev- 
enues of  the  companies  would  revert  to  the  State.  Such  a  limitation 
could  have  no  such  effect  as  to  deprive  private  capital  of  a  just  return. 
It  would  not  deaden  the  energies  of  railway  managers  by  absorbing  all 
the  fruits  of  their  labor  from  those  in  whose  interest  they  are  employed. 
It  would  not  offer  a  temptation  to  withhold  expenditures  upon  the 
property  in  order  to  make  large  dividends  upon  inflated  stock,  but 
rather  to  encourage  a  rivalry  among  the  various  companies  for  superi- 
ority of  facilities  and  arrangement,  a  competition  in  methods  of  busi- 
ness and  facilities  to  the  public,  which  would  be  legitimate  and  healthy 
in  its  tendency.  Capital  invested  in  transportation  is  entitled  to  fair 
returns  ;  it  is  entitled  to  a  liberal  consideration  for  the  risks  assumed, 
sufficiently  liberal  to  properly  encourage  enterprise  in  building  roads 
where  they  are  needed,  but  it  is  entitled  to  no  more;  and  in  view  of  the 
dependence  of  the  commercial  prosperity  of  the  country  upon  the  proper 
railway  facilities  at  fair  prices,  it  would  seem  to  behoove  the  Govern- 


INTERSTATE    COMMEECE.  157 

ments  to  adjust  the  scales  of  justice  fairly,  to  protect  the  capital  against 
communism,  that  capital  might  always  be  ready  to  provide  the  facilities 
needed  by  the  public,  and  to  protect  the  business  of  the  country  against 
unfair  rates,  that  it  might  prosper. 

lu  answering  the  sixth  inquiry  of  your  circular,  referring  to  draw- 
backs and  rebates,  I  intended  to  suggest  that  any  law  dealing  with 
rebates  and  drawbacks  should  also  deal  with  commissions  to  ticket- 
sellers.  An  investigation  of  that  branch  of  the  subject  will  develop  it  to 
be  a  great  evil,  not  so  much  as  a  discrimination  directly  hurtful  to  the 
public  but  as  an  enormously  wasteful  method  of  business,  making  a 
serious  drain  upon  the  revenues  of  the  companies,  the  saving  of  which 
would  make  lower  charges  to  the  public  possible. 


THOMAS  STUBGIS'S  STATEMENT. 

Statement  of  Thomas  Sturgis,  of  Cheyenne,  secretary  of  the  Wyoming  Stock- 

groicers*  Association. 

My  time  will  not  permit  a  prolonged  discussion  of  the  great  questions 
involved,  and  1  shall  confine  myself  to  a  few  points  which  have  been 
forcibly  impressed  on  me  as  important  in  the  matter  of  transportation 
of  freight  by  rail.  Some  of  these  points  are  suggestions  as  to  the  wisest 
and  best  policy  for  both  the  public  and  the  railroads ;  some  to  the  effect 
that  the  rights  and  duties  of  the  shipper  and  of  the  railroad  company 
be  more  clearly  defined  than  is  the  case  under  the  existing  law ;  some 
indicate  much  needed  reforms.  I  wish  to  be  clearly  understood  as 
speaking  only  in  a  general  way  and  without  reference  or  application  to 
any  individual  railroad  or  system  of  railroads  except  when  the  allusion 
is  directly  by  name. 

Stability  of  rates  is  of  the  first  importance.  Sudden  or  frequent  fluc- 
tuations are  bad.  Business  calculations  extend  over  a  series  of  months. 
Freight  rates  are  an  important  factor,  and  the  temporary  advantage 
gained  by  a  "cut"  or  break  in  rates  is  more  than  counterbalanced  by 
the  general  disturbance  and  unsettled  values.  Pooling  by  railroads  is 
not  objectionable  in  itself.  It  conduces  to  stability  of  rates,  but  it 
should  be  supervised  that  it  may  not  be  made,  in  certain  localities,  a 
means  of  extortion.  Bates  are  generally  lower  and  more  reasonable  at 
pooled  points  than  at  points  of  same  length  of  haul  not  pooled,  and 
rates  certainly  fluctuate  less  under  the  pooling  system  than  without  it. 
The  railroads,  however,  find  great  difficulty  in  maintaining  pools.  The 
extension  of  new  roads  to  pooled  points  constantly  necessitates  the  ad- 
mission of  new  members  to  the  pool,  and  the  change  in  the  relative 
traffic  of  old  roads  consequent  on  the  struggle  for  new  business,  and 
the  building  of  branch  roads,  also  necessitates  constant  revision  of  the 
agreement  for  the  division  of  earnings. 

Publicity  of  rates  is  good  and  necessary,  but  it  amounts  to  little  un- 
less  the  rates  are  established  bylaw  and  supervised.  Many  roads  make 
a  public  tariff,  but  do  much  of  their  business  inside  of  it  and  at  lower 
rates,  using  the  published  tariff  to  appeal  to  in  case  of  misunderstand- 
ing between  them  and  the  shipper;  or  in  case  the  shipper  loads  freight 
without  an  express  agreement  applicable  to  that  instance.  In  some 
cases  where  the  published  tariff  is  much  higher  than  the  actual  rate 
regularly  in  use,  and  where  the  said  actual  rate  is  recognized  by  the  rail- 


158  INTERSTATE    COMMERCE. 

road  as  being  a  full  and  satisfactory  payment  to  them  for  the  service 
performed,  the  shipper  can  only  obtain  said  regular  rate  by  signing  a 
printed  "release,"  which  frees  the  railroad  from  much  of  its  usual  re- 
sponsibility and  leaves  it  only  liable  for  accidents  due  to  displacement 
of  rails  or  road-bed  and  breaking  of  car  trucks,  the  guarntee  of  proper 
care  and  treatment  of  property  being  relinquished  by  shipper. 

THE   BASIS   OF  RATES. 

Kates  of  freight  should  be  based  on  a  calculation  in  which  mileage 
and  the  expense  of  doing  the  business  at  each  point  should  be  consid- 
ered together,  recognizing  the  fact  that  a  railroad  can  unquestionably 
make  a  long  haul  -cheaper  per  mile  than  a  short  one,  and  is  therefore 
justified  in  charging  less  on  a  per-mile  estimate  in  the  former  case  than 
in  the  latter.  .But  rates  should  in  no  case  be  higher  at  a  point  where 
there  is  no  competition  than  at  a  point  where,  assuming  the  mileage 
and  general  conditions  to  be  the  same,  competition  does  exist.  In  other 
words,  the  rate  forced  by  competition  should  govern,  and  the  railroad 
should  not  be  permitted  to  make  up*  at  the  non-competitive  point  the 
amount  yielded  at  the  competitive  one.  Kates  should  not  differ  mate- 
rially, whether  bound  east  or  west,  assuming  the  mileage  and  other 
conditions  to  be  substantially  the  same.  At  present  the  rates  for  small 
lots  of  highly-bred  animals  are  in  some  cases  prohibitory  and  in  many 
cases  extravagantly  high.  This  is  made  possible  by  the  fact  that  their 
destination  in  the  West  limits  their  choice  of  transportation  to  one  line, 
of  which  advantage  is  taken  by  the  railroad. 

Evening  freights.  In  answer  to  question  eight  of  the  circular,  I  should 
say,  emphatically,  yes.  The  right  of  the  shipper  to  indicate  the  lines 
and  parts  of  lines  over  which  his  freight  shall  be  transported  should  be 
clearly  affirmed,  and  the  right  of  a  railroad  to  act  as  an  evener  of  freight 
by  dividing1  ;t  arbitrarily  between  two  or  more  railroads,  without  refer- 
ence to  the  line  indicated  by  bill  of  lading,  or  to  divert  freight,  for  pur- 
poses of  its  own,  from  the  railroad  over  which  it  is  billed  to  some  other 
railroad,  should  be  definitely  denied  and  prohibited. 

Kebates  or  drawbacks  are  right  in  many  cases,  and  must  be  allowed. 
At  the  same  time  they  cannot  be  made  public.  Circumstances  con- 
stantly arise  by  which  certain  freight  can  be  carried  for  less  than  the 
usual  rate.  It  unites  favorably  with  other  business,  or  cars  are  otherwise 
necessarily  going  out  or  returning  empty,  &c.  But  to  make  such  re- 
duced rates  public  would  unsettle  rates  and  create  a  demand  for  a  gen- 
eral reduction,  which  could  not  be  conceded  because  the  especial  con- 
dition would  not  exist. 

CONCESSIONS  TO  LARGE   SHIPPERS. 

Concessions  to  large  shippers  are  justifiable  in  special  cases,  as,  for 
instance,  where  they  constitute  an  inducement  to  draw  capital  to  the 
line  of  the  railroad  and  into  the  business  of  the  country  it  traverses, 
and  also  where  it  induces  the  shipper  to  enlarge  his  operations  and 
bring  to  the  railroad  additional  or  new  business,  which  could  not  be 
commanded,  except  for  the  concession  in  rate,  on  account  of  the  expense 
attending  the  advances  of  funds  or  the  distant  location  of  the  business 
sought.  This  reasoning  would  apply,  among  other  products,  to  the  ores 
of  mines  in  mountain  localities  distant  from  railroads  and  to  coal.  The 
concession  by  opening  an  otherwise  impossible  market  accomplishes 
three  benefits :  It  engages  labor  at  the  place  of  production  j  it  in- 


INTERSTATE    COMMERCE.  159 

creases  the  tangible  wealth  of  the  community  by 'converting  into  money 
a  thing  otherwise  dead,  and  it  gives  ro  the  market  to  which  it  is  taken 
a  larger  supply  of  the  material  produced,  and  generally  at  a  lower 
price. 

Arbitrary  discrimination  by  one  railroad  against  another  for  the  pur- 
pose of  suppressing  competition  in  a  different  locality,  should  be  pro- 
hibited by  law.  For  instance,  the  Union  Pacific  Railroad  has  heretofore 
for  years  had  a  traffic  agreement  with  the  Central  Pacific  Railroad  by 
which  freight  was  carried  from  points  on  the  Union  Pacific  to  points  on 
the  Central  Pacific  at  "  through  rates,"  L  e.,  such  rates  as  were  appro- 
priate to  a  long  haul.  Some  mouths  ago  the  Union  Pacific  completed 
the  Oregon  Short  Line,  a  road  extending  northwest  through  Idaho  to 
Portland,  Oreg.,  and  opened  it  for  business.  By  taking  steamer  at  Port 
laud  for  San  Francisco  freight  was  enabled  to  'reach  the  Pacific  coast. 
This  affected  the  business  of  the  Central  Pacific  in  that  class  of  freight. 
In  revenge  they  refused  to  allow  the  Union  Pacific  to  make  any  bills  of 
freight  to  stations  on  the  Central  Pacific;  all  freight  must  be  billed  to 
the  Union  Pacific  terminus  at  Ogden,  and  is  there  rebiHed  by  the  Cen- 
tral Pacific  at  its  own  local  and  often  extortionate  rates.  It  is  not  pre- 
tended that  such  freight  costs  more  to  transport  than  formerly,  but  it 
is  used  as  a  whip  to  force  the  Union  Pacific  into  relinquishing  business 
or  making  concessions  desired  by  the  Central  Pacific  in  Oregon.  The 
Union  Pacific  is  only  indirectly  the  sufl'erer,  the  true  victim  is  the  ship- 
per who  must  pay  an  extortionate  rate  in  going  from  the  east  to  any 
point  in  Utah,  Nevada,  or  California  west  of  Ogden. 

THE  PULLMAN  CAR  COMPANY. 

Legal  supervision  of  these  rates  is  very  necessary.  A  much  higher 
mileage  is  charged  west  of  the  Missouri  River  than  for  the  same  mileage 
east.  ]S\)t  less  than  33  per  cent,  advance  is  demanded,  and  frequently 
more.  The  Pullman  company  provides  no  local  agents  or  conveniences 
for  the  public.  All  their  business  is  done  on  their  cars,  and  accommo- 
dation cannot  be  secured  anywhere  until  the  car  reaches  that  point; 
then  the  traveler,  sick  or  well,  must  take  his  chance.  This  company 
has  also  up  to  the  present  time  avoided  payment  of  any  taxes  to  the 
local  authorities,  State,  territorial,  and  county,  although  having  a  regu- 
lar amount  of  rolling  stock,  whose  value  is  ascertainable,  permanently 
within  and  seeking  the  protection  of  these  various  jurisdictions.  They 
do  this  on  the  plea  that  all  property  of  the  company  is  taxable  in  the 
city  where  it  holds  its  principal  office.  This  is  eminently  wrong,  and  it 
should  be  provided  by  law  that  such  companies  shall  contribute  in  taxes 
to  the  support  of  the  local  governments  to  whom  they  appeal  for  pro- 
tection and  from  whose  people  they  draw  their  business. 

Upon  the  questions  suggested  under  numbers  9, 12,  13, 14,  and  15  of 
the  circular,  I  have  no  opinion  to  offer. 

DISCRIMINATIONS  AGAINST  DRESSED  BEEF. 

One  more  point  requires  notice!  Freight  rates  should  be  in  all  cases 
based  primarily  upon  actual  cost  of  transportation,  in  which  cost  may 
enter  certain  factors,  such  as  the  amount  of  material  transported,  its 
bulk,  and  the  degree  of  care  or  responsibility  involved.  Rates  should 
never  be  arbitrarily  raised  or  lowered  to  benefit  one  class  of  trade  and 
oppress  another.  This  should  be  interdicted  by  law.  An  illustration  is 
this :  The  beef  shipments  from  western  points  eastward  were  formerly 


160  INTERSTATE    COMMERCE. 

made  exclusively  alive.  Large  stock-yards  grew  up  at  many  points,  and 
many  railroads  and  individuals  became  largely  interested  and  accumu- 
lated vast  sums  by  feeding  these  cattle  at  stopping  points.  Further,  the 
railroads  had  large  sums  invested  in  open  cars  fit  only  for  transport- 
ing live  cattle.  The  method  of  killing  the  cattle  in  the  Western  mar- 
kets and  shipping  the  dressed  beef  in  refrigerator  cars  was  then  in- 
troduced. It  is  humane  to  the  animal,  healthy  to  the  consumer,  wisely 
economical  to  the  producer.  But  it  was  less  profitable  to  the  rail- 
roads and  the  stock-yard  companies.  By  the  former  method  twenty  liv- 
ing animals  went  in  a  car ;  by  the  latter  method  the  car  held  the  car- 
casses of  forty.  The  hides,  tallow,  &c:,  constituting  the  half  of  the 
animal's  weight,  remained  in  the  West  at  the  place  of  slaughter  instead 
of  being  carried  East  and  then  back  again.  The  cost  of  carrying  the 
dressed  meat,  allowing  for  the  heavier  and  more  costly  car,  was  per- 
haps one-third  more  to  the  car  than  that  of  carrying  the  live  animals. 
But  disregarding  this  altogether  the  railroads  fixed  the  rates  at  nearly 
double,  the  avowed-  object  being  to  make  the  dressed  beef,  when  deliv- 
ered at  the  East,  cost  as  much  as  if  sent  in  the  old  way.  This  was 
done  to  accomplish  two  objects :  First,  to  discourage  the  new  and 
improved  method,  and  drive  from  the  market  that  class  of  competition  ; 
second,  to  secure  and  retain  to  the  railroads  and  middlemen  the  profits 
derived  from  the  old  system.  Two  parties  were  to  suffer:  First,  the 
Western  producer,  who  would  get  more  for  his  material  under  the  im- 
proved system,  because  it  was  being  more  economically  handled ;  sec- 
ond, the  Eastern  consumer,  who  could  be  supplied  more  cheaply  and 
with  better  material  under  the  new  system  than  the  old.  This  tyran- 
nical assumption  of  power  by  the  railroad  is  so  glaring,  and  so  opposed 
to  the  best  interests  of  the  community,  that  it  needs  but  be  mentioned 
to  command  attention  and  legal  redress.  No  economic  question  now 
before  the  public  is  of  greater  importance  than  this. 


GEORGE  E    LEIGHTON'S  STATEMENT. 
Statement  of  George  E.  Leighton,  of  Saint  Louis,  Mo. 

You  have  probably  discovered  the  fact  before  this  that  those  who  are 
most  competent  to  speak  do  not  care  to  do  so.  I  know  the  fact  that 
most  of  our  larger  shippers,  from  their  ability  to  make  private  contracts 
and  secure  substantial  rebates,  prefer  the  competition  which  comes  from 
the  absence  of  any  regulation  whatever  to  a  regulated  traffic.  But  this 
is  largely  due  to  the  fact  that  they  do  not  believe  any  regulation  will  be 
effective,  and  that  a  law  will  only  embarrass,  not  prevent,  the  favoritism 
which  now  exists. 

My  own  idea,  and  it  is  based  upon  some  considerable  experience,  is 
that  most  of  the  evils  now  existing  would  be  removed  by  requiring  fixed 
and  definite  classifications,  approved  by  a  commission,  and  fixed,  pub- 
lished rates;  that  no  rate  should  be  changed,  either  by  reduction  or  ad- 
vance, without  at  least  thirty  days'  public  notice ;  that  any  advance 
without  such  notice  should  be  void ;  that  any  reduction  without  notice 
should  entitle  any  shipper  within  thirty  days  previous  thereto  to  a  de- 
duction and  return  of  a  like  proportion  ;  and  that  any  rebate  or  draw- 
back allowed  should  be  a  misdemeanor  for  which  the  company  should 
be  answerable  by  tine  of  a  substantial  amount,  to  be  shared  by  any  in- 
former. 


INTERSTATE    COMMERCE.  161 

This  may  seem  severe,  but  no  regulation  by  law  is  worth  anything 
that  is  not  made  effective,  and  you  cannot  make  it  effective  unless  a 
violation  is  visited  with  a  penalty  sufficiently  severe  and  certain  as  to 
make -a  violation  somewhat  hazardous. 

In  European  countries  rates  and  schedules  vary  but  little  in  years. 
The  only  change  is  that  which  is  brought  about  by  the  operation  of 
natural  laws.  Any  change  is  well  considered  and  deliberate.  In  this 
country  it  is  brought  about  too  frequently  by  the  position  of  the  man- 
agers in  the  stock  market,  the  bad  temper  of  the  freight  agent,  or  the 
recklessness  of  a  bankrupt  company,  to  neither  of  which  -should  the 
commerce  of  the  country  be  placed  in  subjection. 

I  believe  very  strongly  in  the  value  of  a  commission,  not  so  much 
with  authority  to  act  by  positive  iuterfereuce,  as  to  acquire  full  and  ac- 
curate and  well  digested  information  which  the  legislative  power  couid 
trust  fully  as  the  basis  of  legislative  action. 

It  is  to  be  remembered  that  the  evils  now  existing  are  quite  as  much 
due  to  reckless  reductions  as  to  reckless  advance  of  rates.  All  depart- 
ures from  the  reasonable  and  just  and  natural  charge  are  a  menace  to 
the  safety  of  sound  commercial,  manufacturing,  or  agricultural  indus- 
try. It  is  a  false  notion  that  reckless  reductions  inure  to  the  popular 
advantage.  Any  sharp  cut  in  rates  is  a  direct  blow  to  the  whole  stock 
in  trade  of  the  country  which  has  been  transported  at  higher  rates,  and 
in  that  class  of  cases  where  freight  bears  a  large  proportion  to  value  is 
destructive  of  all  safe  business  enterprise. 


ISAAC  H.  STURGEON'S  STATEMENT. 
Statement  by  Isaac  H.  Sturgeon,  of  Saint  Louis,  Mo. 

It  seems  to  me  proper  in  answering  the  questions  propounded  by  your 
committee  that  I  should  state  that  from  1855  to  1860  I  was  the  president 
and  general  superintendent  in  constructing  and  operating  one  of  our 
leading  railroads  in  the  State  of  Missouri ;  that  I  was  often  appointed 
without  solicitation  by  ex-President  Grant  United  States  commissioner 
to  examine  railroads  constructed  with  aid  from  the  National  Govern- 
ment, and  that  in  1874  the  New  York  and  Krie,  New  York  Central,  and 
Pennsylvania  Central  Railroads,  together  with  many  of  the  leading 
Western  railroads,  met  through  their  representatives  at  Saratoga,  N. 
Y.,  and  appointed  three  commissioners  to  represent  the  three  Eastern 
trunk  lines  named  and  seven  commissioners  for  the  Western  railroads, 
and  without  my  knowledge  I  was  selected  as  the  Western  commissioner 
for  Saint  Louis.  The  object  of  the  roads  in  establishing  this  Eastern 
and  Western  commission  was  to  regulate  rates  and  make  them  uniform, 
leaving  shippers  to  select  the  route  by  which  they  would  ship,  and  to  do 
away  with  the  system  of  rebates  and  drawbacks,  &c.,  the  object  seem- 
ing to  be  to  do  That  which  a  national  commission  established  by  Con- 
gress might  do.  But  after  six  months  of  trial  the  commission  was  dis- 
solved and  the  effort  abandoned.  The  commission  found  their  efforts 
opposed  very  generally  by  the  general  freight  and  ticket  agents  of  the 
roads,  and  the  press  at  that  time  generally  seemed  inimical  to  the  effort. 
l>ut  since  that  time  and  at  the  present  day  there  seems  quite  a  una- 
nimity of  sentiment  in  favor  of  the  Government  establishing  a  national 
board,  with  power  to  e:i(oice  that  which  the  roads  then  voluntarily  made 

UttttAP 11 


162  INTERSTATE    COMMERCE. 

an  effort  to  do.  I  might  say  that  the  managers  of  the  fast  freight 
lines  were  evidently  opposed  to  the  commission,  and  it  seemed  to  me 
did  all  in  their  power  to  have  the  Railroads  abandon  the  effort  to  regu- 
late rates  through  a  commission.  With  this  preface  of  explanation  I 
will  proceed  to  answer  the  interrogatories  of  the  committee  as  well  as  i 
can,  but  at  the  same  time  1  would  say  that  there  are  others  that  your 
committee  can  reach  far  more  able  than  myself  to  assist  you  in  forming 
an  opinion  as  to  what  should  be  recommended  to  Congress.  Still,  I 
will  submit  for  your  consideration  the  opinions  I  have  on  the  questions 
you  propound. 

(1)  By  establishing  a  national  commission,  with  full  powers  to  fix 
and  regulate  rates,  inflicting  severe  penalties  for  any  direct  or  indirect 
violation  of  the  regulations  established  by  the  commission.     This  com- 
mission should  be  clothed  with  ample  powers  to  fix  and  regulate  rates 
after  due  investigation,  and  to  compel  the  observance  of  the  rates,  rules, 
and  regulations  they  may  adopt. 

(2)  I  am  not  familiar  enough  with  the  rates  now  charged. upon  the 
different  classifications  of  freights  or  the  passenger  rates  to  speak  on 
this  subject. 

(3)  Publicity  of  rates  should  by  all  means  be  required  by  law,  and 
changes  of  rates  should  be  prohibited  without  at  least  ten  days'  notice. 
The  only  mjethod  of  securing  uniformity  and  stability  of  rates,  it  seems 
to  me,  is  to  establish  the  national  railway  commission  by  Congress, 
with  power  to  regulate  and  fix  rates,  which  shall  only  be  changed  by 
said  commission.     My  experience  taught  me  whilst  serving  as  Western 
railway  commissioner  that  there  was  no  great  necessity  for  more  than 
two  rates  during  the  year,  viz,  a  winter  and  summer  rate.    The  suin- 
-mer  rate  to  meet  water  competition,  and  the  winter  rate  should  be  bet- 
ter than  the  summer  rate,  because,  as  I  understand,  it  is  more  expen- 
sive in  winter  to  operate  the  roads,  and  there  is  a  greater  pressure  of 
business. 

(4)  1  think  a  system  of  maximum  and  minimum  rates  should  be  es- 
tablished. 

(5)  The  elements  of  the  cost  of  the  road  and  conditions  of  business 
should  be  considered  in  fixing  the  tariffs  on  interstate  traffic.     A  road 
built  where  the  physical  difficulties  to  be  overcome  in  its  construction 
were  greater  than  that  of  another,  costing  more  to  construct  it,  should, 
as  a  matter  of  course,  be  considered  in  fixing  rates.    Th.e  pro  rata  share 
in  such  cases  should  be  fixed  so  as  to  be  just,  and  I  think  this  can  only 
be  done  by  a  commission  after  they  have  informed  themselves  of  all 
the  facts  bearing  upon  the  question.    The  cost  of  construction,  and  the 
cost  of  operating  the  road  after  construction,  are  factors  that  should  be 
considered  in  fixing  the  tariffs. 

REBATES  SHOULD  BE  ABOLISHED. 

(C)  No  system  of  rebates  or  drawbacks  should  be  allowed  under  any 
circumstances  that  I  can  conceive  of.  They  should  be  entirely  abol- 
ished. 1  feel  that  it  is  hardly  necessary  for  me  to  say  to  you  that  in 
their  practical  working  they  are  demoralizing  to  both  railway  officials 
and  shippers,  in  this  way:  The  clerk  of  any  establishment  goes  to  the 
different  railway  offices  to  ascertain  rates.  He  is  told  by  one  road  that 
it  will  take  it  for  a  certain  rate.  He  replies,  "  1  can  do  better  than 
that."  This  may  or  may  riot  be  true,  but  the  statement  operates  on  the 
fears  of  tin-  general  freight  agent  of  the  road,  and  for  fear  of  losing  the 
business  he  says,  '» I  can't  give  you  a  less  rate,  for  I  am  bound  by  some 


INTERSTATE    COMMERCE.  163 

agreement  with  another  road,  but  I  will  bill  your  goods  at  this  rate  and 
allow  you  a  drawback  or  rebate  of  so  much."  The  shipping  agent  may 
try  all.  the  lines,  making  a  like  statement  to  each,  which  may  or  may 
not  be  true  to  any  road,  and  the  one  whose  fears  he  can  most  operate, 
on  gets  his  freights.  This  system  results  in  giving  one  shipper  an  ad- 
vantage over  another,  and  in  so  much  loss  to  the  less  fortunate  ship- 
per as  to  rates,  and  besides  this  injustice,  it  demoralizes  both  shipper 
and  freight  agents  by  inducing  uncandid  statements  as  to  what  the 
shipper  can  do  in  rates  and  what  the  railroad  will  do.  Fix  the  rates 
by  a  commission  and  leave  shippers  to  choose  their  line  of  railroad  to 
ship  by,  and  it  will  save  the  time  to  shippers  of  large  establishments 
the  expense  of  a  clerk  in  testing  rates,  and  all  shippers  will  be  placed 
on  the  same  footing,  and  know  that  all  are  treated  alike  and  have  the 
same  rates. 

(7)  My  best  judgment  is  that  pooling  agreements  between  railroads 
doing  an  interstate  business  should  be  entirely  prohibited  by  law. 

(8)  Provision  should  be  made  by  law  for  securing  to  shippers  the  right 
to  select  the  lines  over  which  their  shipments  shall  be  transported. 

(9)  I  can  conceive  of  no  method  that  will  secure  a  uniform  rate  for 
the  transportation  of  passengers  and  freights  by  all  the  corporations 
engaged  in  interstate  commerce,  except  by  Congress  establishing  an 
able  board  of  commissioners,  with  ample  powers.    It  would,  I  think, 
take  such  a  commission  quite  a  length  of  time  to  gather  all  the  informa- 
tion ueeeed  to  enable  them  to  act  justly  and  intelligently  in  'fixing  uni- 
form rates;  and  if  the  commission  should  be  established  a  liberal  com- 
pensation should  be  allowed,  so  as  to  secure  the  very  best  'talent  of  the 
country,  and  a  liberal  appropriation  should  be  made  for  a  sufficient 
clerical  force  of  the  best  class  of  men  to  aid  them  in  their  work  of  inves- 
tigation, keeping  records,  correspondence,  &c.,  for  the  work,  if  properly 
done,  would  be  very  great  and  demand  the  best  talent  of  the  country. 

My  judgment  is  that  after  the  system  spoKen  of  becomes  well  estab- 
lished the  railway  managers  will  be  far  better  satisfied  than  with  the 
present  system,  and  that  it  will  go  far  towards  allaying  the  antagonistic 
feeling  now  existing  in  many  parts  of  the  country  towards  the  railroads. 
My  experience  is  that  if  the  farmers  and  shippers  can  be  made  to  feel 
that  they  are  fairly  arid  justly  treated  there  will  be  no  antagonism  of 
the  railroads.  They  are  willing  to  pay  rates  that  will  fairly  remunerate 
on  a  fair  cost  of  the  railroads,  but  will  never  be  reconciled  to  have  their 
products  taxed  to  pay  interest  on  bonds  and  dividends  on  stock  not  a 
dollar  of  which  ever  went  into  the  building  or  betterment  of  the  road. 

(10)  I  think  it  proper  that  a  shade  lower  rate  should  be  allowed  for  a 
long  over  a  short  haul,  and  in  any  act  of  Congress  that  may  be  passed 
power  shoujd  be  given  to  the  commission  to  regulate  this  matter  after 
full  investigation  by  the  commission. 

(11)  I  think  no  concessions  should  be  allowed  large  shippers,  but  if, 
after  full  investigation  by  the  national  commission,  heai  ing  what  can 
be  said  pro  and  con  by  shippers  and  railroads,  it  should  seem  proper 
to  make  such  concessions,  they  should  be  made  known  to  the  public. 

(lli)  I  believe  it  would  be  wise  to  require  the  adoption  of  a  uniform 
system  of  accounts.  I  may  say  that  if  the  commission  is  established 
I  deem  it  essential  to  facilitate  their  examinations  and  investigations. 
The  system  should  be  plain  and  simple  and  alike  for  all,  as  1  think. 

ANNUAL,  REPORTS. 

(13)  I  think  it  is  desirable  that  such  coporations  make  duplicate  an- 
nual reports  to  Congress  and  the  commission.  I  think  the  first  thing 


164  INTERSTATE    COMMERCE. 

is  to  get  at  the  actual  cost  of  the  road,  not  counting  as  cost  any  bonds 
or  stock  commonly  called  "  watered"  bond  or  stock.  Companies  may 
have  had  to  sell  bonds  very  low  to  get  the  means  to  complete  and 
stock  their  roads.  If  a  bona  fide  sale,  and  the  proceeds  of  such  sale 
actually  went  into  the 'construction  of  the  road,  it  should  properly  be 
reckoned  as  a  part  of  the  cost  of  the  road  at  the  face  of  the  bonds. 
The  gross  earnings  from  all  sources  should  be  shown,*and  the  operating 
expenses  of  all  kinds,  and  perhaps  a  separate  account  for  anything  ex- 
pended in  the  betterment  of  the  road.  Such  accounts  should  be  item- 
ized and  clearly  show  how  much  received  from  freights  or  passage, 
carrying  mails,  &c.,  and  the  amount  paid  track  hands,  and  all  employe's, 
repairs  to  engines,  cars,  &c. ;  in  a  word  every  item  of  expense  in  oper- 
ating the  road,  and  also  all  moneys  paid  for  locomotives,  cars,  and  all 
additions  to  the  road. 

IMPROVEMENT  OF  WATERWAYS  ESSENTIAL. 

(14)  In  making  provision  for  cheap  transportation  it  is  essential  that 
the  Government  should  develop'  and  maintain  a  system  of  waterways. 
Our  great  rivers  are  in  a  sense  "  inland  seas"  leading  to  the  oceans, 
and  for  many  of  our  heavier  freights,  that  will  not  bear  railway  trans- 
portation, the  best  and  cheapest  means  of  carrying  to  the  ships  of  the 
world  at  our  different  ports  certain  products  that  we  desire  to  send  to 
foreign  markets  and  to  bring  to  us  certain  kinds  of  imported  goods. 
They  are  high  ways  or  railroads,  if  you  please,  already  constructed,  need- 
ing only  that  we  improve  them  so  as  to  add  to  the  security  of  life  and 
property  upon  them  and  increase  their  utility  for  our  commerce. 

THE  PANAMA  CANAL. 

Permit  me  to  sa*y  in  this  connection  that  I  feel  that  the  interests  of 
the  country  demand  the  construction  of  a  canal  to  connect  the  Illinois 
Eiver  with  the  lakes  at  Chicago,  which  would  give  to  the  country  west 
of  Saint  Louis  a  water  route  east  as  well  as  south  by  the  Mississippi 
Eiver;  and  may  I  submit  further  for  your  thought  the  great  and,  as  it 
seems  to  me,  overwhelming  importance  of  the  earliest  possible  con- 
struction of  a  free  ship-canal  by  our  Government  across  the  Isthmus 
of  Panama,  free  to  the  vessels  of  the  United  States,  with 'a  reasonable 
charge  on  foreign  tonnage.  Let  us  build  and  own  and  control  this 
canal,  free  from  all  entangling  alliances,  as  a  gift  to  our  maritime  ton- 
nage. I  am  confident  it  would  "be  wise,  and  would  do  more  to  enable 
our  country  to  successfully  compete  for  the  commerce  of  Asia,  Aus- 
tralia, and  the  islands  of  the  Pacific  Ocean  than  anything  else  we 
could  do. 

If  I  read  the  news  aright  at  this  day  the  European  powers  are  con- 
sidering the  question  of  making  the  Suez  Canal  free;  but  whether  so  or  not, 
it  is  clearly  our  interest,  as  it  seems,  to  me  to  build  this  canal  with  the 
least  possible  delay  so  as  to  accommodate  the  largest  vessels  with  the 
fewest  possible  number  of  locks  and  dams,  thereby  at  once  giving  ac- 
cess to  our  vessels  to  all  the  west  coast  of  North  and  South  America, 
the  people  of  the  islands  of  the  Pacific  Ocean,  Australia,  and  Asia. 
The  construction  of  this  free  ship-canal  would  by  cheapening  the  rates 
of  freights  especially  give  to  our  country  greater  advantages  than  the 
imagination  can  well  comprehend. 

1  think  it  is  well  understood  that  the  building  of  our  first  transcon- 
tinental railway  precipitated  the  building  of  the  Suez  Canal  as  a  couu- 


INTERSTATE   COMMERCE.  165 

ter  project,  which,owinjs:tothehighrat€«  of  freights  roelntained  over  car 

I';icific.roads,  causes  all  commerce  for  Europe  and  our  own  country  to 
take  that  route,  as  it  is  cheaper  and  more  expeditions.  Give  us  the  free 
ship-canal  and  we  may  hope  to  fully  realize  the  benefits  that  we  ex- 
pected to  accrue  to  us  from  the  building  of  our  transcontinental  rail- 
ways, but  iu  which  we  have  largely  been  disappointed. 

A  COMMISSION    RECOMMENDED. 

(15)  Legislation  can  best  be  enforced  by  a  commission  with  ample 
powers.  A  commission  for  this  purpose  should,  by  all  means,  be  estab 
lished,  and  I  am  satisfied  that  if  this  commission  is  established  and 
sustained  to  the  fullest  extent  for  a  lew  years  it  will  in  the  end  result 
in  great  good  to  the  country  and  be  sustained  not  only  by  the  people 
but  also  by  the  railways.  It  is  a  new  departure,  and  the  railways  may 
think  it  their  interest  to  resist  the  establishment  of  such  a  commission, 
but  I  am  confident  that  every  railway  manager  and  director  of  all  good 
roads  will  be  glad  of  its  adoption  after  it  is  in  full  working  order,  for  it 
will  be  their  .protection  and  will  result,  in  a  reconciliation  of  interests 
between  the  railroad,  the  farming,  and  other  shipping  interests. 

My  judgment  is  that  the  greatest  dissatisfaction  at  this  day  with  the 
railroads  results  from  the  fact  that  the  farming  and  producing  interests 
believe  that  they  are  made  to  pay  rates  to  pay  interest  on  bonds  and 
stock  that  were  never  used  in  building  the  roads,  but  were  sold  in  the 
market  and  the  proceeds  pocketed.  They  are  unwilling  that  their 
horses,  mules,  cattle,  sheep,  hogs,  stock  and  poultry  of  all  kinds,  their 
wheat,  oats,  rye,  tobacco,  hemp,  butter,  and  eggs' and  all  they  produce 
by  the  sweat  of  their  brows,  shall  be  taxed  by  rates  to  pay  interest  on 
"  watered"  bonds  and  stocks  whilst  trackmen  are  ground  down  to  tin- 
very  lowest  possible  point,  and  all  other  employes  save  presidents  and 
superintendents.  These  employe's  may  have  to  endure  their  wages,  but 
there  is  a  hidden  discontent  that  not  unfreq-uently  manifests  itself  ill 
strikes  and  unrest  and  unhappiness. 

FAST  FREIGHT  AND  EXPRESS  LINES. 

I  would  name  another  matter  in  connection  with  the  subject  under 
consideration,  and  it  is  this :  The  railroads  are  built,  and  you  are  familiar 
with  the  way  in  which  it  is  done  West,  and  perhaps  in  other  parts  of 
the  country;  first,  to  get  all  the  stock  subscribed  possible:  second, 
they  go  to  New  York  with  this  basis  and  bond  the  road  and  sell  the 
bonds  at  the  best  price  that  can  be  had.  Not  unfrequently  a  second 
mortgage  has- to  be  given,  and  these  bends  are  sold  very  low.  There 
comes  a  time  with  many  roads  that  they  cannot  pay  interest.  The 
roads  are  sold  out  and  new  parties  become  their  owners  and  capitalize 
them  anew,  and  make  all  they  can  by  sale  of  bonds  and  stocks,  per- 
haps, as  I  said  before,  not  a  dollar  going  into  the  construction  or  bet- 
terment of  the  road.  But  in  addition  to  this,  and  this  is  the  point  to 
which  I  wished  to  invite  your  attention,  fast-freight  lines  are  formed 
and  express  companies  in  which  not  unfrequently  most  of  the  leading 
officers  of  the  company  have  stock.  Then  ft  becomes  their  interest  to 
drive  all  freights  they  can  on  to  their  fast-freight  and  express-company 
lines.  The  stockholders  of  the  roads  may  get  no  dividends,  but  the 
stockholders  in  the  fast-freight  lines  and  express  companies  get  usually 
very  remunerative  dividends.  Shippers  find  that  if  they  send  by  the 
regular  freight  lines  they  can  form  no  idea  when  their  freights  will  get 


'INTERSTATE    COMMERCE. 

through,  and  thus  a  large  part  of  the  freight  business  is  driven  on  to 
the  fast-freight  lines  and  express  companies  to  enrich  a  corporation 
formed  within  the  railway  company  and  to  the  great  wrong  and  injury 
of  shippers. 

It  will  be  impossible  to  reconcile  the  farming  and  producing  interests 
to  the  roads  or  make  employe's  contented,  with  their  wages  reduced  to 
the  lowest  possible  point,  as  long  as  they  believe  that  this  is  done  to 
pay  interest  on  bonds  and  stocks  the  proceeds  of  which  never  went  into 
the  construction  or  betterment  of  the  roads.  Eemove  this  cause,  and 
through  a  commission  fixing  just  rates  to  the  railways  and  the  people, 
and  all  cause  of  complaint  will  be  removed,  and  people  and  employes 
will  become  reconciled  and  contented  with  the  management  of  the  roads; 
for  my  conviction  is  that  if  they  feel  they  are  fairly  and  justly'  treated, 
and  that  the  managers  of  the  roads  are  doing  the  fair  thing  by  them 
and  the  best  that  can  be  done  under  the  circumstances,  they  will  bear 
uncomplainingly  any  burthens  that  they  may  feel  cannot  be  helped. 

This  harmonious  relation  I  believe  can  be  established  by  a  high  board 
of  disinterested  commissioners,  who  will  do  justice  both  to  the  railroads 
and  the  people.  It  seems  to  me  that  only  the  managers  of  roads  who 
do  not  wish  to  conduct  their  business  according  to  just  and  legitimate 
methods  can  object  to  the  establishment  of  such  a  commission  as  is 
proposed. 


E.  C.  SIMMONS'S  STATEMENT. 

• 

Statement  of  E.  G.  Simmons,  president  Simmons  Hardware  Company, 

Saint  Louis,  Mo. 

(1)  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  discrimi- 
nation by  corporations  engaged  in  inter-State  commerce. 

This  question  is  so  far-reaching  and  complex  in  its  nature  that  it 
seems  almost  impossible  to  give  a  satisfactory  solution  of  it.  The  ex- 
tent of  the  country  is  so  great  and  the  conditions  so  varied  that  a  rate 
which  maybe  an  unjust  discrimination  in  one  section  of  the  country,  or 
one  which  would  be  called  an  extortion,  would  be  on  others  hardly  prof- 
itable for  the  railroads  to  do  business  on.  These  questions  are  largely 
solved  by  the  peculiar  circumstances  surrounding  each  road;  circum- 
stances of  cost  for  operating  roads,  circumstances  of  population,  and 
necessarily  the  amount  of  freight  carried. 

In  my  opinion  there  can  be  no  intelligent  answer  given  to  this  ques- 
tion. It  is  one  that  the  railroads  have  themselves  been  hammering 
away  at  for  many  years,  and  they  seem  to  be  no  nearer  the  solution 
now  than  when  they  started.  Any  man  who  could  give  a  correct  solu- 
tion of  this  problem  ought  to  command  a  salary  higher  than  that  paid 
now  to  anybody  else  in  America  for  his  services.  It  would  seem  to  me 
to  be  presumption  on  my  part  to  answer  this  question,  any  further  than 
to  say  that  I  believe  these  things  are  largely  regulated  by  competition, 
which  is  the  life  of  all  trade,  and  which  is  the  controlling  element  to 
keep  down  unfavorable  and  unjust  extortion.  If  there  can  be  a  solu- 
tion to  this  question,  in  my  mind  there  is  only  one,  and  that  is  to  limit 
the  profits  upon  the  capital  of  the  railroad  companies,  and  have  paid 
into  the  State  or  the  Government,  or  both,  all  the  surplus  beyond  this 
fixed  rate.  This  may  or  may  not  be  feasible,  and  it»  is  a  question  so 
deep  that  scarcely  any  one  has  followed  it  out  sufficiently  to  be  able  to 
determine  upon  it. 


INTERSTATE    COMMERCE.  1(1? 

(2)  The  reasonableness  of  the  rates  now  chiir^cd  by  sueli  corpum!  ions  t'.ir  loc;i!  ami 
th  rough  traffic. 

in  my  opinion  the  rates  now  as  a  rule  are  too  low  on  freight,  generally, 
and  especially  the  rate  on  through  traffic.  For  example,  take  freight 
of  second  and  third  class  from  the  city  of  Kew  York  to  the  city  of  Saint 
Louis  or  Chicago  for,  say,  30  or  40  cents  per  100  pounds,  which  seems  t<> 
me  unreasonably  low.  The  local  traffic,  I  think,  is  more  nearly  upon 
the  proper  basis,  and  if  there  can  be  any  overcharges  it  is  more  in  i  In- 
local  traffic  than  in  the  through.  But  in  my  judgment,  the  present 
rates  of  freight  are  on  an  average  too  low,  and  right  here  permit  me  to 
say  that  the  passenger  rates  are  entirely  too  high.  If  these  things  were 
mofle  nearly  equal  it  would  seem  to  me  that  it  would  be  better  tor  the 
country. 

(3)  Whether  publicity  of  rates  should  be  required  bylaw;  whether 'changes  of 
rates  without  public  notice  should  be  prohibited,  and  the    best  method  of  .securing 
uniformity  and  stability  of  ratej. 

I  do  not  think  that  the  publication  of  special  rates  should  be  required 
by  law.  The  present  system  is  about  as  good  as  I  think  it  can  be  ar- 
ranged; that  is  to  say,  the  traffic  rate  from  which  exceptions  are  made 
for  special  cases.  I  do  not  think  that  changes  of  special  rates  without 
publication  of  same  should  be  prohibitory  by  law,  for  this  reason,  that 
there  are  many  times  products  of  a  country  in  great  surplus  which  can 
only  be  moved  by  special  concession  on  the  part  of  the  railroad  com- 
panies, and  the  railroads  under  the  circumstances  do  better  to  haul 
that  product  and  to  nourish  the  country  and  assist  it  to  become  stronger, 
by  making,  them  concessions  and  enabling  them  to  bring  their  products 
to  good  markets,  rather  than  to  hold  out  for  full  tariff  rates;  and  for 
that  reason  I  would  oppose  the  changing  of  rates  being  prohibitory 
without  public  notice.  General  or  card  rates,  however,  should  always 
'be  published  at  least  two  weeks  prior  to  the  time  of  change. 

Take,  for  instance,  a  recent  case  that  has  come  under  my  knowledge: 
Utah  this  last  year  has  produced  an  enormous  amount  of  wheat.  At 
the  regular  rate  it  is  prohibitory  to  ship  it  east,  and  yet,  recently  a 
party  from  Utah  has  been  here  with  samples,  also  in  Chicago,  and  by 
reason  of  very  material  concessions  made  by  the  railroad  companies  has 
been  enabled  to  bring  that  wheat  to  Saint  Louis  and  Chicago,  and  to 
sell  many  car-loads  at  a  price  that  reimburses  them  moderately  for  their 
labor  in  Utah.  Were  the  change  of  rates  prohibitory,  without  public 
notice  such  cases  as  this  would  be  impossible,  and  but  for  the  conces- 
sion on  the  part  of  the  railroad  company  there  would  not  have  been  any 
outlet  for  this  Utah  wheat;  iu  fact,  they  would  not  know  what  to  do 
with  it.  I  do  not  know  that  any  methods  can  be  suggested  to  secure 
uniformity  and  stability  of  rates.  This  very  largely  depends  upon  the 
supply  and  demand,  and  also  very  largely  upon  the  price  that  the  prod- 
ucts in  the  various  sections  of  the  country  bring  from  year  to  year. 
The  only  method  that  I  know  of,  by  which  a  uniformity  and  stability 
of  rates  can  be  accomplished,  is  the  money  pooling  system,  and  there 
are  of  course  many  great  objections  to  this. 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  inter-State  commerce. 

It  seems  to  me  that  the  question  here  propounded  is  of  a  similar  char- 


reasons  that  the  elements  which  enter  into  this  cannot  be  controlled. 


Ifi8  INTERSTATE  COMMERCE. 

^Maximum  and  minimum  rates  are  largely  depending  upori  the  markets, 
the  products,  &c.,  and  as  the  Government  caiinot  possibly  have  control 
of  the  markets,  it  would  seern  to  me  likewise  impossible  for  them  to 
control  maximum  and  minimum  rates.  This  matter  also  is  very  largely 
regulated  by  competition,  not  only  by  the  railroads,  but  by  the  water- 
ways, and  some  seasons  must  have  of  necessity  different  bearings  from 
what  it  would  have  in  others. 

(5)  The  elements  of  cost,  the  conditions  of  business,  and  the  other  factors  that  should 
be  considered  in  fixing  the  tariffs  on  inter-State  traffic. 

The  elements  of  cost  and  conditions  of  business  and  other  factors 
1  hat  can  be  considered  in  fixing  the  tariffs  on  inter-State  commerce 
vary  so  widely  in  the  different  States  that  it  seems  to  me  highly  impos- 
sible to  harmonize  them.  They  vary  in  cost  of  construction,  in  cost  of 
arrangement,  and  vary  largely  in  the  amount  of  freight  to  be  transported 
over  the  roads,  and  the  simple  questions  of  weather  and  natural  ele- 
ments and  so  on,  with  the  cost  of  operating  the  roads,  have  much 
to  do  with  it.  For  example,  in  some  sections  where  snow  and  rain  pre- 
vail to  a  remarkable  degree,  doing  enormous  damage  to  the  railroads, 
they  are  particularly  expensive  in  their  effects;  whereas  in  others  this 
is  Jiot  the  case,  and  this  same  idea  could  be  followed  up  to  an  unlimited 
extent.  In  view  of  this,  I  would  say  that  these  things  are  proper  only 
lor  the  consideration  of  the  railroads  operating,  and  no  one  else  could 
form  a  correct  idea  as  to  what  would  be  best  for  the  whole  country, 
for  what  might  be  best  for-  one  section  might  be  positive  death  to 
another. 

(6)  Should  any  system    of  rebates  or  drawbacks  be  allowed  ?     If  so,  should  such 
transactions  be  regulated  by  law  and  be  subject  to  official  inspection  and  approval? 

I  would  oppose  the  system  of  rebates  and  drawbacks  on  the  general 
principle  that  it  leads  to  demoralization  and  oftentimes  dishonesty.  If 
the  railroad  company  desires  to  make  a  special.rate,  I  think  they  should 
make  it  in  an  open  and  above-board  manner,  and  I  see  no  reason  why 
they  should  not  have  the  privilege  of  making  special  rates  for  special 
cases  and  under  special  circumstances,  any  more  than  a  merchant  should 
in  selling  his  goods  when  he  would  make  special  concessions  to  foreign 
purchasers  as  against  local  ones;  but  the  rebate  and  drawback  system 
1  think  quite  pernicious. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  doing  an  inter-State 
business  be  permitted,  or  should  they  be  entirely  prohibited  by  law  ?     If  they  should 
be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agreements 
to  be  made  public  and  subject  to  official  approval  ? 

Pooling  contracts  and  agreements  between  railroads  have  done  very 
much  to  reduce  the  cost  of  transportation,  and  have  made  it  possible 
for  interior  places,  say  a  thousand  miles  or  more  from  the  sea-coast,  to 
get  their  goods  at  a  very  much  less  price  than  they  could  have  been 
obtained  without  these  pooling  contracts.  In  my  judgment,  they  should 
not  be  prohibited  by  law,  but  should  be  regulated,  and  their  terms  of 
agreement  should  be  submitted  to  officers  appointed  for  that  purpose 
but  such  officers  should  not  make  such  terms  of  agreement  public  fur- 
ther than  is  required  for  their  own  protection  and  integrity. 

(8)  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  select 
the  lines  and  parts  of  lines  over  which  their  shipments  shall  be  transported  ? 

I  think  that  provisions  should  be  made  by  law  for  securing  to  ship- 
pers the  right  to  select  routes  or  parts  of  routes  over  which  their  ship 
ments  should  be  transported.  It  seems  to  me  that  in  shipping  from  one 


INTERSTATE    COMMERCE. 

point  to  another  be  should  have  the  privilege,  as  he  pays  the 
bill,  to  elect  by  which  route  his  shipment  should  go.  But  should  he 
not  select  the  route  himself  in  a  specific  manner,  then  I  would  think  it 
wise  to  permit  the  transportation  companies  to  use  their  own  judgment 
as  to  the  routes  over  which  the  shipment  should  be  transported. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  pas- 
sengers and  freights  by  all  the  corporations  engaged  in  inter-State  commerce  be  best 
.secured  T 

I  do  not  think  any  method  can  be  formulated  by  which  a  uniformity 
of  passenger  and  freight  rates  can  be  obtained  by  all  the  corporations 
engaged  in  inter-State  commerce.  Of  course  a  State  can  regulate  that 
matter  for  railroads  operating  in  its  own  State,  but  in  my  judgment  no 
legislation  can  ever  act  intelligently  and  wisely  on  this  subject  for  the 
whole  country. 

(10)  Should  corporations  engaged  in  inter-State  commerce  be  permitted  to  charge  a 
lower  proportioned  rate  for  a  long  than  for  a  short  haul  t    Does  the  public  interest 
require  any  legislation  on  the  subject? 

Corporations  engaged  in  inter-State  commerce,  I  think,  should  be  per- 
mitted to  charge  a  lower  proportioned  rate  for  a  long  than  for  a  short 
haul,  as  it  stands  to  reason  that  a  larger  amount  of  business  can  be  done 
on  a  smaller  percentage  of  cost  than  a  small  business,  just  as  with  a 
merchant  in  mercantile  pursuits.  The  question  of  long  and  short  hauls, 
the  delays,  class  of  freight,  handling  &c.,  on  short  hauls  becomes  quite  a 
factor  in  this  arrangement.  In  my  judgment,  public  interest  does  not 
require  legislation  on  that  subject. 

(11)  Should  any  concession  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 

s,  and  should  such  concessions  be  made  known  to  the  public  T 


Concessions  on  account  of  large  shipments  are  really  a  dangerous 
element  to  permit  to  enter  into  inter-State  traffic,  because  they  to  a  large 
extent  promote  monopolies,  which  should  always  be  avoided,  and  while 
I  believe  that  considerable  latitude  should  be  given  to  the  railroad 
companies  on'  account  of  the  difference  in  locations,  markets,  cost  of 
operation  and  various  other  things,  I  would  think  it  very  unwise  to 
permit  railroads  to  make  concessions  simply  on  account  of  large  ship- 
ments. If  the  large  shippers  can  ship  goods  cheaper  than  the  small 
ones,  the  small  ones  are  virtually  driven  out  of  business,  and  1  would 
call  it  legislation  of  a  dangerous  character  which  would  permit  railroads 
to  make  concessions  simply  on  account  of  large  shipments. 

(12)  Should  corporations  engaged  in  inter-State  commerce  be  required  to  adopt  a 
uniform  system  of  accounts  f  '    . 

The  system  of  accounts  used  by  the  railroads  is  so  complex,  in  fact  is 
a  science  of  itself,  that  1  shouid  consider  it  presumption  on  my  part  to 
comment  on  it  at  all  ;  it  is  of  such  a  character  that  no  one  can  do  so, 
except  those  familiar  with  it.  .1  am  told  by  railroad  men  that  many  of 
the.  brightest  minds  in  America  are  engaged  in  perfecting  a  uniform 
system  of  railroad  accounts,  and  it  would  seem  to  me  any  one  not  en- 
gaged in  this  business  is  so  entirely  ignorant  of  it  that  they  would  be 
unable  to  venture  an  intelligent  opinion. 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government  f    If  so,  what  information  as  to  their  earnings,  expenses,  and 
operations  should  such  reports  contain  T 

It  would  seem  to  me  desirable  that  all  such  corporations  should  be  re- 
quired to  make  annual  reports  to  the  Government  and  in  most  full  de- 


170  INTERSTATE  COMMERCE! 

tail,  giving  if  possible  nil  information  connected  with  their  mads,  such" 
as  the  number  <>f  miles  operated  in  each  State,  the  bonded  and  floating 
debt,  the  expenses  of  operation,  the  capital  stock  of  the  road,  the  total 
revenue  and  an  itemized  statement  of  all  the  various  sources  from 
which  this  revenue  is  derived,  also  an  estimate  of  the  current  value  of 
their  road,  and  such  connections  and  branches,  belonging  to  them,  to- 
gether with  the  value  of  all  other  property,  such  as  rolling  stock,  ter- 
minal facilities,  machine  shops,  round-houses  and  other  property,  which 
it  is  customary  for  railroads  to  own. 

(14)  In  making  provision    lor  securing  cheap  transportation,  is  it  or  is  it  not  im- 
jioi.-ta.nt  that  the  Government  should  develop  and  maintain  a  system  of  waterways  ? 

I  think  it  quite  necessary  in  making  provision  for  cheap  transporta- 
tion that  the  Government  should  develop  and  maintain  a  system  of 
water-ways,  because  that  promotes  competition,  and  as  the  basis  of  my 
replies  is  that  competition  is  the  life'of  trade,  1  should  like  to  see  at  all 
times  as  much  competition  kept  in  the  way  of  transportation  as  it  is 
possible.  The  development  .and  maintenance  of  good  water-ways  by 
the  Government  has  a  salutary  effect  upon  the  railroad  companies,  and 
I  trust  it  may  ever  continue. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  inter-State  commerce  be 
enforced  ?    Should  a  commissson  or  rather  a  special  tribunal   be  established  to  carry 

out  the  provisions  of  any  law  Congress  may  enact? 

• 

It  would  seem  to  me  wise  that  transportation  committees  or  commis 
sions  could  be  profitably  and  wisely  formed  by  the  Government,  per- 
mitting the  parties  interested  to  be  represented.  First.the  Govern- 
ment, next  the  people,  then  the  railroad  companies,  and  they  in  turn 
select  one  or  more  to  act  as  arbitrators  in  their  own  body,  and  all  such 
differences  between  railroad  companies  and  Government  laws  and  rules 
and  regulations  on  this  subject  should  be  referred  to  the  arbitrators  on 
this  committee. 


J.  P.  HANSON'S  STATEMENT. 

Statement  of  J.  F.  Hanson,  agent  Bibb  Manufacturing  Company,  Macon, 

Ga. 

To  question  first,  I  will  say  very  frankly  that  it  involves  so  many 
complicated  conditions  that  few  men,  if  any,  are  capable  of  answering 
it.  I  have  learned  by  experience  that  what  to  outsiders  appeared  gross 
discriminations,  were,  under  the  explanations  of  reputable  railroad  man- 
agers, but  the  necessary  and  unavoidable  adjustments  forced  upon  them 
by  competition. 

(2)  Complaints  of  unreasonable  rates  on  local  freights  are  very  rare 
in  this  State.  We  have  a  railroad  commission  with  supreme  powers. 
This  commission  is  enforcing  rates  that  are  too  low  to  enable  our  rail- 
roads to  keep  up  proper  condition  and  pay  small  dividends  upon  cost  of 
construction.  Through  freights  are  very  low  on  through  traffic  to 
nearly  all  points,  West,  North,  and  East,  to  which  we  are  shipping  goods. 
We  ship  from  New  Hampshire  to  Texas,  and  as  far  West  as  Nebraska. 
To  all  points  beyond  the  Mississippi  River,  and  south  of  Missouri,  with 
probably  the  exception  of  Little  Rock,  rates  are  pietty  high.  When, 
however,  the  fact  that  railroad  development  in  this  last  section  is  of 
rather  late  date  is  taken  into  account,  together  with  the  light  traffic 
from  this  section,  it  is  a  question  whether  the  rates  could  be  judiciously 


INTERSTATE    COMMERCE.  171 

lowered  or  not.     Through  rates  generally  aie  so  low  that  whui  may  be 
u  reasonable  rate  under  the  conditions  named  looks  hijji  by  comparison. 

(3)  It  would  seem  reasonable  to  suppose  the  interest    oi  transporta- 
tion lines  would  cause  them  to  make  rates  sufficiently  public -lor  all 
general  purposes.  • 

(4)  As  a  business  proposition,  this  is  the  most  important  contained 
in  your  list  of  inquiries.     The  question  of  reasonable  rates,  as  has  been 
amply  demonstrated,  has  been1  solved  by  voluntary  and  natural  com- 
petition.    We  seem  to  have  reached  the  point  where  the  question  of 
how  to  obtain  reasonable  rates  must  give  place  to  that  of  how  to  main 
taifj  rates  sufficiently  high  for  the  promotion  of  our  railroad  interests, 
and  the  fair  protection  of  investors  in  railroad  property.     I  am  dearly 
of  the  opinion  that  we  need  a  li-rait  below  which  the  roads  cannot  go 
more  than  one  to  mark  the  limit  they  are  to  be  permitted  to  charge. 

(5)  Actual  value  of  property,  relative  cost  of  construction  and  main 
teuauce,  and  the  volume  of  business,  it  would  appear,  are  the  proper 
conditions  upon  which   to  determine  the  question.     It  would   not  be 
right  to  deprive  a  railroad  company   of  the  advantages  of  enhanced 
value%over  cost,   by  reason  of  wise  forecast  and  investment,  andjudi- 
cious  management  upon  the   part  of  the  roads.     Neither  should  they 
be  held  responsible  for  outlay  to  rebuild  and  re-equip  their  property. 
when  the  expense  of  the  same  could  not  be  avoided,  as  in  the  case  of 
many  Southern  roads  destroyed  during  the  war. 

(6)  A  great  deal  has  been  said  with  reference  to  rebates  and  draw- 
backs, and  the  advantages  that  are  allowed  large  shippers  over  small 
ones,  and  the  rates  for  long  hauls  as  against  short  ones.     The  same 
principle  that  governs  the  prices  of  goods  sold   at  wholesale  and  retail 
applies  to  this  question.     It  is  not  reasonable  to  suppose  that  transpor- 
tation companies  will  ever  ignore  the  fact  that  the  largest  customers  are 
to  have  some  advantages  over  small  ones.  .If  the  Government  under- 
takes to  say  that  men  who  are  energetic  and  enterprising  shall  be  de- 
prived of  the  ad  vantages  that  always  accrue,  large  success  to  what  encour- 
agement will  be  left  to  men  to  win  hard-earned  and  eminent  success  f 
Is  it  right,  then,  to  attempt  to  secure  to  drones  and  sluggards  the  ad- 
vantages for  which  the  more  worthy  struggle  long  and  hard  1    This 
matter  may  be  safely  left  with  the  railroads.     Any  interference  would 
work  results  not  looked  for,  and  if  the  tendency  of  such  interference 
should  equalise  rates,  the  final  result  would  be  damage  to  consumers, 
who  are  at  last  the  beneficiaries  of  all  concessions  or  advantages. 

(7)  If  Government  control  is  ever  resorted  to,  the  method  of  exercis- 
ing the  same  will  assume  this  shape.    It  is  the  only  practicable  method 
as  between  th,e  railroads  of  maintaining  uniformity,  and  to  the  perfec- 
tion of  this  system  the  best  efforts  of  the  ablest  traffic  managers  in  the 
country  have  been  industriously  directed.     1  cannot  coifbeiveof  a  gov- 
ernment commission  operating  in  any  other  method  than  through  the 
pooling  plan.     While  there  is  much  popular  clamor  against  pools,  the 
people  who  are  raising  it  are  singularly  inconsistent  in  demanding  that 
the  Government  shall  institute  an  absolute  pooling  system.     Any  uni- 
fied control  results  in  this  practically  if  it  is  to  produce  any  result  at  all. 

(8)  This  should  depend  upon  contract.     Roads  combine  to  make  a 
line  in  many  cases,  and  rates  are  based  upon  agreement  between  two 
or  more  lines.     The  central    line  cannot  always  make   rates  and  give 
shipper 'choice  of  connections. 

(9)  Have  embraced  this  in  preceding  answers. 

(10)  It  seems  unreasonable  that  a  shipper  who  has  one  package  of 
freight  to  ship  should  expect  the  same  to  be  taken  at  the  same  rate  per 


172  INTERSTATE    COMMERCE. 


for  one  hundred  miles  charged  the  shipper  of  .a  thousand  pack- 
ages per  hundred  miles  for  a  distance  of  a  thousand  miles.  This  is  im- 
practicable, and  would  result  ju  increasing  rates  for  long  distances 
without  corresponding  reductions  on  purely  local  and  small  shipments. 
I  cannot  see  that  the  public  interest  can  be  served  by  any  legislation 
on  this  point. 

(11)  The  same  rule  that  applies  to  purchases  of  large  lots  of  goods, 
juid  the  purchases  of  small  lots,  should  apply  to  purchases  of  large 
freights  over  purchases  of  small  freights.     This  is  natural  —  it  is  busi- 
ness —  and  any  attempt  to  reverse  the  laws  of  trade  upon  this  point  will 
result  in  mischief.     There  is  no  more  reason  for  making  such  conces- 
sions known  to  the  public  than  for  publishing  the  terms  upon  which 
Messrs.  Marshall,  Field  &  Co.  or  Messrs.  J.  Y.  Farwell  &  Co.  buy  goods. 
1  1  is  none  of  the  public's  business. 

(12)  This  had  better  be  left,  like  that  of  uniform  couplings  for  cars, 
to  the  railroad  companies.  • 

(13)  All  corporations  in  which  the  public  are  interested,  as  investors. 
should  be  required  to  make  annual  publication  of  such  facts  as  will 
enable  an  intelligent  man  to  form  a  definite  and  correct  opinion  o/  the 
condition  of  the  company  and  the  value  of  its  stock  and  other  security. 

(14)  Artificial  water  routes  in  the  interior  would  not  in  this  day  of 
steel  rails  and  cheap  transportation  pay  to  the  public  any  returns  cor- 
responding to  Government  outlay  in  their  construction.    Private  capi- 
tal will  build  any  line  that  will  pay.    The  Government  should  appro- 
priate money  liberally  for  the  improvement  of  natural  water  ways,  and 
for  putting  and  keeping  the  harbors  in  order.     Spending  money  on 
small  streams  when  no  public  benefit  accrues  is  wrong. 

(15)  If  Congress  does  anything,  it  would  of  necessity  be  experimental, 
and  hence  great  caution  should  be  exercised  that  the  public,  as  well 
as  the  transportation  lines,  are  not  damaged  rather  than  benefited.    A 
commission,  it  would  seem,  will  be  the  method  or  means  employed  to 
test  the  -value  of  any  legislation  that  may  be  adopted.    I  confess  that  I 
am  opposed  to  Government  control  or  interference  with  the  matter. 
The  tendency  to  govern  too  much  will  be  strengthened  by  this  action, 
and  it  will  not  be  long  before  a  commission  will  be  demanded  to  regu- 
late the  production  and  price  of  goods,  labor,  &c.    Better  let  them  take 
care  of  themselves  upon  the  basis  that  underlies  all  business.    Com- 
petition will  keep  prices  about  right,  and  if  at,  times  and  in  certain  in- 
stances the  rule  does  not  hold  good,  the  evils   that  arise  are  less  than 
those  that  would  in  all  probability  attend  any  attempt  to  regulate  this 
vast  business  by  the  Federal  Government. 

In  conclusion,  1  beg  that  you  will  permit  me  to  say  that  I  do  not  now 
nor  never  have  I  owned  a  share  of  railroad  stock  or  a  railroad  bond. 
I  have  embodfed  my  conclusions  from  a  business  standpoint  and  from 
considerations  of  justice  and  public  policy  that  seem  to  justify  these 
conclusions. 


JOHN  W.  GEUBBS'S  STATEMENT. 
Statement  of  John  W.  Orubbs,  wholesale  grocer,  Richmond,  Ind. 

Upon  a  few  of  the  points  of  inquiry  I  have  pronounced  opinions,  and 
very  gladly  avail  myself  of  the  opportunity  to  give  them  for  what  they 
may  be  worth. 

(2)  The  rates  at  present  in  force  for  local  and  through  freight  busi- 


INTERSTATE    COMMERCE.  173 

ness  are,  I  think,  as  a  rule,  reasonable,  and  generally  accepted  as  fair 
and  equitable. 

(3)  Publicity  of  rates  should  by  all  means  be  required  by  law  and 
no  change  allowed  without  due  notice.  Under  the  present  arrangement 
it  not  unfrequently  happens  that  favored  shippers  are  notified  in  -ad- 
vance of  contemplated  changes  of  schedule  rates,  and  are  let  in  under 
the  reduction  or  enabled  to  take  advantage  otherwise  of  the  change,  while 
the  customer  not  so  favored  may  be  subject  to  loss  on  account  of  igno- 
rance of  the  change. 

(4  and  5)  On  these  points  I  am  not  sufficiently  advised  to  speak  in- 
telligently. 

(6)  No  system  of  rebates  and  drawbacks  should  be  allowed.  The 
whole  system,  as  practiced,  is  pernicious,  unjust,  and  indefensible.  The 
published  schedule  of  the  carrying  company  should  regulate  prices. 
There  should  be  no  favoritism  allowed  except  in  the  case  of  large  ship- 
pers, and  this  exception  should  be  as  specifically  apartof  the  published 
rates  as  any  other.  When  one  shipper,  through  any  kind  of  favoritism, 
secures  a  system  of  rebates,  he  has  an  unjust  advantage  of  his  neighbor, 
resulting  very  often  in  the  demoralization  of  trade  and  resulting  in  no 
benefit  to  the  recipient. 

The  whole  system  of  pooling  I  regard,  as  an  impracticable  idea.  The 
workings  of  such  pools  up  to  this  date  have  been  expensive,  unsatis- 
factory, and  without  any  good  results  to  the  contracting  parties  or  the 
business  public.  The  origin  of  pools  is  to  shut  out  and  prevent  all  com- 
petition; to  fix  arbitrary  rates  without  reference  to  varying  conditions. 
They  should  not  be  permitted  under  any  conditions,  as  their  practical 
workings  are  in  the  interest  of  monopoly,  and  give  to  corporations  an 
undue  control  of  private  business. 

(8)  One  of  the»con  trolling  reasons  for  forbidding  pools  arises  from  the 
abuse  of  the  control  of  freights  exercised  under  their  working.  Every 
shipper  should  have  the  right  to  designate  and  contrdl  absolutely  the 
shipment  of  his  own  goods.  The  pool  system  arbitrarily  denies  this. 
The  experience  of  this  city  has  been  expensive,  annoying,  and  trouble- 
some. Shipments  ordered  by  the  most  direct,  shortest,  and  quickest 
routes  have,  in  violation  of  express  orders,  been  diverted  to  other  lines, 
longer,  more  uncertain,  and  requiring  largely  increased  time  in  delivery. 
When  remonstrated  with,  the  reply  is  that  the  change  was  necessary  to 
equalize  pool  business,  thus  totallyignoring  every  interest  or  consider- 
ation except  the  single  convenience  of  the  pool.  If  goods  should  reach 
destination  in  five  days  by  the  designated  line,  and  you  get  them  at  the 
end  of  ten  or  fifteen  days  by  some  outside  line  that  may  have  been  short 
on  the  particular  day  of  shipment,  the  consignee  must  pocket  his  loss 
and  smother  his  just  indignation  in  the  interest  of  the  pool.  No  one 
thing  connected  with  the  carrying  business  of  the  country  has  been  so 
productive  of  loss  and  inconvenience  as  the  pooling  system.  It  needs 
to  be  sat  down  on  hard,  and  every  shipper  should  have  secured  to  him 
the  absolute  right  to  select  and  designate  the  lines  over  which  his  ship- 
ment shall  be  made. 

(10)  I  think  there  can  be  no  reasonable  objection  to  the  privilege  of 
contracting  at  a  lower  proportionate  rate  for  a  long  than  a  short  haul. 
For  two  reasons.  The  haul  can  be  made  cheaper  proportionately,  and 
the  whole  business  of  the  country  is  adjusted  on  the  basis  of  this  prin- 
ciple. I  can  buy  at  a  less  price  for  large  quantities  of  merchandise  than 
for  small  quantities.  Manufacturers  grade  their  prices  by  quantities,  and 
trade  generally  is  regulated  in  this,  way.  There  is  no  reason  for  restrict' 


174  INTERSTATE    COMMERCE. 

ing  the  carrying  business.  Tbey  can  afford  a  cheaper  rate  proportion- 
ately on  1,000  miles  than  on  100,  and  ought  not  to  be  restricted  in  the 
privilege. 

The  other  questions  are  out  of  my  range  of  examination.  I  have 
given  hastily  and  crudely  my  views  on  the  points  in  which  our  people 
have  an  interest. 


FRANK  W.  TKACY'S  STATEMENT. 

Statement  of  Frank  W.  Tracy,  Springfield,  III.,  president  of  the  Central 

Illinois  Coal  Company. 

Jn  preparing  an  answer  to  the  circular  of  the  committee  I  have  been 
guided  by  my  observations  as  a  shipper  and  a  member  of  the  board^of 
directors  of  a  railroad  corporation.  I  believe  the  interests  of  the  rail- 
roads and  the  people  are  identical,  and  any  legislation  which  develops 
the  one  interest  will  promote  the  other.  I  would  suggest,  if  I  may  be 
allowed,  that  the  study  by  your  committee  of  the  railway  clearing-house 
system  of  England  would  be  helpful  to  you  in  your  purpose.  It  has 
been  successful  since  its  conception  in  keeping  rates  fairly  steady 
throughout  that  country. 

(1)  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  discrimi- 
nation by  corporations  engaged  in  inter-State  commerce. 

If  one  could  answer  this  question  properly  it  would  solve  the  entire 
problem  before  your  committee,  but  in  the  present  crude  knowledge  of 
the  conditions  governing  inter-State  commerce  it  is  doubtful  if  it  could 
be  answered  in  such  a  manner.  The  "  best  method"  must  be  evolved 
from  the  experiences  of  the  past  and  future  combined.  Very  many  com- 
plaints of  extortion  and  unjust  discrimination  are  made.  But  then  arises 
the  query,  what  is  extortion  and  what  is  unjust  discrimination  ?  If  every 
one  were  agreed  as  to  the  answers  to  these  queries  there  would  be  no 
trouble  in  finding  the  "best  method,77  but  the  answers  are  as  varied  as 
there  are  different  modes  of  thought  in  individuals;  therefore,  it  seems 
to  me,  there  should  be  some  p}an  suggested  which  would  bring  the 
light  of  experience  and  common  sense  upon  these  complaints,  whereby 
these  nice  and  delicate  questions  constantly  arising  could  be  definitely 
settled.  The  simplest  plan  would  be  a  commission  of  experienced  and 
practical  men,  having  thorough  knowledge  of  the  relations  of  railroads 
and  shippers  to  each  other,  who  could  have  charge  of  all  corporations 
engaged  in  inter-State  commerce,  with  authority  of  law  to  enforce  fair 
and  reasonable  rates.  Through  the  experiences  of  this  commission  could 
be  evolved  the  best  method  for  preventing  extortion  and  unjust  d^- 
cri  initiation. 

(2)  The  reasonableness  of  the  rates  now  charged  by  such  corporations  for  local  and 
through  traffic.   ' 

The  traffic  rates  established  by  the  Illinois  railroad  commission  are 
generally  believed  to  be  reasonable. 

(:>)  Whether  publicity  of  rates  should  be  required  bylaw,  whether  changes  of  rates 
without  public  notice  should  be  prohibited,  and  the  best  method  of  securing  uni- 
formity and  stability  of  rates. 

Uniformity  and  stability  of  rates  is  more  to  be  desired  by  shippers  and 
railroad  corporations  than  anything  else.  The  rate  is  not  so  much  a 
tipnsideration  as  that  it  should  be  uniform  and  stable.  Publicity  of 


INTERSTATE  •  COMMERCE.  175 

rates  certainly  tends  to  this  end,  therefore  I  believe  DO  rates  should  be 
changed  without  due  notice  to  the  public. 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  inter-State  commerce. 

The  establishment  of  maximum  and  minimum  rates  is  another  help 
towards  maintaining  uniformity  and  stability  of  rates;  therefore,  in  my 
opinion,  they  should  be  established  by  the  'commission  in  consultation 
with  the  proper  officials  of  the  corporation. 

(5)  The  elements  of  cost,  the  conditi  ons  of  business,  and  the  other  factors  that 
should  be  considered  in  fixing  the  tariffs  on  inter-State  commerce. 

There  are  so  many  elements  entering  into  the  cost  of  inter-State  com 
nierce  that  it  is  very  difficult  to  enumerate.  The  competition  of  the 
natural  highways  of  river,  lake,  and  canal  is  overshadowing,  and  as  they 
can  certainly  carry  freight  cheaper  than  railroads,  their  rates  would 
govern.  The  cost  of  terminal  facilities,  too,  makes  quite  a  condition  in 
making  rates.  Cities  like  New  York  and  Chicago  require  very  expen- 
sive terminal  facilities,  while  cities  like  Indianapolis  and  Springfield  are. 
comparatively  inexpensive.  So  varied  are  these  conditions  that  no  gen- 
eral rule  can  be  established. 

(6)  Should  any  system  of  rebates  and  drawbacks  be  allowed  T    If  so,  should  such 
transactions  bo  regulated   by  law  and  be  subject  to  official  inspection  and  approval, 
or  should  they  be  entirely  prohibited  ? 

If  rates  are  to  be  uniform  and  stable  drawbacks  and  rebates  should 
not  be  allowed.  They  should  be  entirely  prohibited. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  doing  an  inter- 
State  business  be  permitted,  or  should  they  be  entirely  prohibited  by  lawf    If  they 
should  be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agree- 
ments to  be  made  public  and  subject  to  official  approval? 

I  am  firmly  of  the  opinion  that  the  best-devised  scheme  for  the  main- 
tenance of  uniform  and  stable  rates  is  the  pooling  system.  Undue  com- 
petition causes  violent  fluctuations  of  rates,  which  more  than  anything 
else  causes  business  derangements.  If  some  such  system  is  not  inau- 
gurated. the  bankrupt  corporation  which  now  pays  a  debt  will  fix 
rates  for  the  solvent  corporation  running  parallel  with  it,  though  if 
such  a  process  i*  long  continued  it  would  soon  be  in  the  condition  of 
its  competitor.  All  pools  should  be  under  the  control  of  the  commis- 
sion, who  should  have  power  to"  see  that  fair  rates  are  fixed  and  main- 
tained. Under  this  control,  I  believe  pools  would  be  found  to  be  of 
great  service  to  the  shipping  public. 

V8)  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  select 
the  lines  over  which  I  heir  shipments  shall  be  transported? 

Unquestionably,  though  there  should  be  provisions  in  the  lawprevent- 
ipg  shippers  from  combining  against  any  one  corporation,  as  that  would 
be  '•  unjust  discrimination." 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  pas- 
scugers  and  i'reights  by  all  corporations  engaged  in  inter-State  commerce  be  best 
secured  ? 

I  would  repeat  the  answer  to  the  first  question  as  the  answer  to  this  — 
that  is,  through  the  experience  of  a  commission  rules  could  be  evolved 
which  would  secure  a  uniform  rate. 


(10j  Should  corporations  engaged  iu  inter-State  commerce  be  permitted 
a  lower  proportionate  rate  for  a  long  than  for  a  short  haul?    Does  the  public  in: 

require  any  legislation  on  that  subject  f 

The  expense  of  hauling  freight  bears  but  a  small  proportion  to  the  ex- 


176  INTERSTATE    COMMERCE. 

pense  of  terminal  facilities.  If,  therefore,  the  expense  of  terminal  facili- 
ties is  spread  over  10  miles,  the  expense  would  be  much  heavier  than  if 
spread  over  100  miles.  As  the  expense  to  the  corporation  should  gov- 
ern the  fee  for  hauling  freights,  certainly  the  corporation  should  chaj  ge 
a  proportionately  greater  rate  for  a  short  distance,  than  for  a  longer 
one.  I  think  this  should  be  permitted  by  legislation. 

(11)  Should  any  concessions  in  rates  be  allowed  to  large  shippers  except  such  ::s 
represent  the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  such  concessions  be  made  known  to  the  public  ? 

If  large  shippers  get  only  such  concessions  as  represent  the  differ- 
ence in  expense  of  handling  large  shipments  over  small  ones,  I  believe 
they  should  be  satisfied.  No  concealments  of  any  kind  should  be  al- 
lowed. Public  interests  could  not  be  properly  guarded  in  secrecy.  All 
transactions  must  be  open  to  the  public. 

(12)  Should  corporations  engaged  in  inter-State  commerce  be  required  to  adopt  a 
uniform  system  of  accounts  T 

Immaterial,  though  their  reports  to  the  commission  should  be  uni- 
form. 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government?     If  so,  what  information  as  to  their  earnings,  expenses, 
and  operations  should  such  reports  contain  ? 

Yes ;  they  should  contain  full  reports,  such  as  are  now  required  by 
the  various  States. 

(14)  In  making  provision  for  securing  cheap  transportation,  is  it  or  is  it  not  impor- 
tant that  the  Government  should  develop  and  maintain  a  system  of  water  routes? 

The  water-ways  will  govern  the  rates  in  the  summer;  in  winter  they 
have  but  little  influence.  I  believe  without  the  water-ways  the  rate  of 
freight  would  be  much  higher  both  summer  and  winter. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  inter-State  commerce  be 
best  enforced.     Should  a  commission  or  other  special  tribunal  be  established  to  carry 
out  the  provision  of  any  law  Congress  may  enact  ? 

I  have  advocated  a  commission  throughout,  and  do  not  believe  a  law 
can  be  made  a  success  without  a  commission,  who  can  reduce  the  amount 
of  friction  between  the  public  and  corporations,  until  they  understand 
that  the  interests  of  each  are  identical.  If  for  no  other  reason  than 
this  a  commission  would  be  a  great  public  blessing. 


W.  H.  ROBINSON'S  STATEMENT. 

Statement  of  William  H.  Robinson,  Fairjield,  111.,  ex-railroad  and  ware-- 
home  commissioner  of  Illinois. 

Upon  the  general  question  as  to  whether  a  law  of  Congress  govern- 
ing inter-State  commerce  would  be  beneficial,  there  would  seem  to  be  but 
little  doubt  that  the  time  has  come  when  some  law  of  the  kind  is  nec- 
essary, not  only  for  the  protection  of  the  large  producing  and  shipping 
interests  of  the  country,  but  as  well  for  the  protection  of  corporations 
engaged  in  transportation. 

(1)  As  to  the  first  inquiry — "The  best  method  of  preventing  the 
practice  of  extortion  and  unjust  discrimination  by  corporations."  In 
my  judgment  the  best  and  only  effective  method  to  prevent  such  wrongs 


INTERSTATE    COMMERCE.  177 

is  to  provide  penalties  and  forfeitures  against  the  wrong  doer,  to  be  en- 
forced  perhaps  as  a  last  resort  when  milder  remedies  fail,  and  to  be 
under  the  control  of  a  special  commission  or  tribunal  selected  for  tbat 
purpose. 

(2)  It  would  seem  to  be  desirable  and  fair  to  all  shippers  that  rates 
should  be  public  and  that  they  should  not  be  changed  without  public 
notice  being  given  for  a  reasonable  time.  A  law  to  this  effect  properly 
enforced  with  penalties  provided  for  its  violation  would  of  itself  tend 
to  establish  uniformity  and  stability  of  rates.  By  such  means  both 
buyers  and  sellers  of  articles  of  commerce  could  know  the  rates  of  trans- 
portation, and  there  would  be  less  liability  of  either  party  being  cheated. 
I  do  not  mean  that  rates  should  be  absolutely  iron  clad,  but  should  be 
flexible  within  certain  limits. 

(4)  I  am  well  convinced  that  one  of  the  best  features  of  the  law  would 
be  to  provide  for  maximum  and  minimum  rates.    The  maximum  rates 
would  prevent  extortion  to  the  shipper;  and  the  minimum  rates  would 
lessen,  if  it  did  not  entirely  break  up,  the  vicious  practice  of  urate  cut- 
ting" that  has  been  so  disastrous  to  railroad  property  in  the  last  few 
years.     It  is  conceded  that  the  margin  between  the  maximum  and  mini- 
mum rates  should  be  liberal,  so  that  transportation  companies  could  be 
confined  within  its  limits  under  all  circumstances. 

(5)  The  elements  to  be  considered  in  fixing  the  tariffs  on  inter-State 
business  are  so  numerous  that  it  would  be  difficult  to  name  them  in 
detail.    In  the  case  of  railroads,  the  actual  cost  of  road  bed  and  equip- 
ment would  of  course  be  among  the  controlling  elements.    The  volume 
of  business,  density  of  population  traversed  by  the  line,  cost  of  terminal 
facilities,  the  high  or  low  value  of  the  commodity  transported,  the  hazard 
of  carrying  certain  articles,  the  perishable  nature  of  others  requiring 
quick  transportation,  as  well  as  many  other  elements,  should  be  con- 
sidered in  fixing  the  tariffs. 

(6)  Circumstances  may  possibly  arise  where  the  payment  of  rebates 
would  not  be  improper,  but  the  system  has  produced  so  much  evil,  and 
built  up  individuals  and  localities  to  the  detriment  of  others  equally 
deserving,  that,  if  permitted,  it  shoud  be  regulated  by  law  and  be  sub- 
ject to  official  approval. 

(8)  Pooling  contracts  and  agreements  between  railroads  may  not  in 
itself  be  improper,  but  evil  and  sometimes  oppression  grows  out  of  it. 
I  would  not  say  that  pooling  contracts  should  be  absolutely  prohibited 
by  law,  but  they  should  be  subject  to  investigation  and  official  ap- 
proval. 

(8)  The  right  of  a  shipper  to  select  the  line  or  lines  of  road  over  which 
he  may  ship  ought  certainly  to  be  recognized.     Many  reasons  uiight  be 
given  in  support  of  this;  distance,  grade,  terminal  facilities,  character 
of  cars,  &c.,  are  often  important  to  the  shipper,  and  there  seems  to  be 
no  just  reason  why  a  party  should  not  be  permitted  to  ship  over  the 
line  of  his  choice,  rather  than  one  arbitrarily  selected  for  him  by  others. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  pas- 
sengers and  freights  by  all  corporations  engaged  in  inter-State  commerce  be  secured  f 

This  may  be  answered  in  a  general  way  by  requiring  all  corporations, 
in  all  cases  and  for  all  persons,  to  charge  the  same  rate  for  the  same 
service.  It  is  not  intended  by  this  to  urge  that  a  rate  charged  for  a 
given  number  of  tons  hauled  a  given  distance  and  between  two  given 
points  should  in  all  cases  and  under  all  circumstances  be  the  rate 
charged  for  the  same  quantity  and  character  of  freight  hauled  the  same 
distance  between  two  other  points,  Uniformity  of  rates  means  uniform 

16232  AP 12 


178  INTERSTATE    COMMERCE. 

i 

compensation  for  like  service,  and  not  an  iron-clad  rate  to  be  governed 
in  all  cases  by  distance  alone. 

(10)  That  corporations  should  be  permitted  to  charge  a  proportionately 
lower  rate  for  a  long  than  for  a  short  haul  is  so  patent  to  every  one  that 
it  requires  no  argument  in  support  of  the  proposition.  And  it  is  doubt- 
ful if  any  good  would  be  accomplished  by  legislation  upon  the  subject. 
Laws  governing  inter- State  commerce  to  be  valuable  should  be  as  simple 
as  possible  and  embrace  only  such  matters  as  the  public  interests  re- 
quire, leaving  all  other  questions  to  be  settled  and  controlled  by  the  un- 
written laws  of  trade  and  competition. 

(11)  Should  aiiy  concessions  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  the  actual  difference  of  handling  large  shipments  over  small  shipments  f 

Why  should  there  be  I  Is  there  any  good  reason  why  the  large  shipper 
should  have  any  more  advantage  over  the  small  shipper  than  is  actually 
represented  in  the  difference  in  the  cost  of  handling  large  shipments 
over  small  ones?  Complaints  are  constantly  made  that  corporations 
discriminate  against  the  small  shippers,  and  one  of  the  strong  reasons 
for  adopting  the  proposed  law  is  to  correct  this  evil.  Large  shippers 
who  are  fortunate  enough  to  control  large  capital  are  entitled  to  the 
advantage  that  legitimately  belongs  to  the  movement  of  freight  in  large 
quantities,  but  to  grant  them  favors  beyond  that  would  be  to  discrimi- 
nate against  the  small  shipper  of  limited  capital  and  would  be  clearly 
wrong. 

(13)  It.  would  unquestionably  aid  the  tribunal  who  may  be  charged 
with  the  enforcement  of  the  law  to  require  corporations  to  make  annual 
reports  to  the  Government.  Such  reports  should  contain  the  gross  earn- 
ings of  inter-State  business,  the  expenses  including  taxes,  cost  of  road 
bed  and  equipments,  bonded  debt,  mileage,  terminal  facilities,  tons  of 
freight  transported,  number  of  passengers  carried,  accidents  to  passen- 
gers and  employes  and  causes,  what  appliances  and  means  are  used  to 
prevent  accidents,  salaries  paid  to  officers  and  other  employe's,  number 
of  employe's,  and,  in  short,  a  fair  exhibit  of  the  property  and  its  earn- 
ings. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  inter-State  commerce  be 
enforced  T 

It  is  difficult  to  see  how  any  law  of  the  kind  could  be  made  useful  or 
effective  without  a  commission  specially  selected  for  its  enforcement. 
It  is  well  known  that  railway  corporations  are  managed  by  shrewd  bus- 
iness men  and  skillful  lawyers,  at  all  times  watchful  of  their  interests; 
and  if  the  people  are  to  be  benefited  by  the  law  its  enforcement  should 
be  placed  in  competent  hands — in  the  hands  of  men  who  know  some- 
thing of  the  magnitude  of  the  questions  involved  and  whose  ability  and 
integrity  will  command  the  respect  of  the  people  and  corporations.  No 
man  would  think  of  going  into  the  courts  to  enforce  law  against  a 
great  corporation.  The  law,  to  command  respect  and  obedience,  must 
provide  machinery  for  its  own  enforcement,  and  no  better  means  can  be 
devised  than  the  selection  of  a  tribunal  of  able  and  discreet  men  with 
the  power  of  the  Government  behind  them.  Any  law  that  may  be 
adopted  must  necessarily  be  largely  experimental  and  far  from  perfect, 
but  if  intrusted  to  an  intelligent  commission  whose  business  it  is  to  con- 
struct rules  for  the  control  of  inter-State  commerce  within  the  provisions 
of  the  law,  and  who  will  carefully  observe  its  practical  workings,  they 
can  suggest  changes  and  amendments  that  will  finally  make  it  alike 
popular  with  the  people  and  corporations.  The  success  of  the  law  will 
depend  at  last  largely  upon  the  character  of  the  men  selected  to  cany 


INTERSTATE    COMMERCE.  179 

out  its  provisions.  If  men  of  broad  views,  sound  discretion,  and  reason- 
able industry  are  selected,  the  law  will  be  beneficial  and  popular,  as 
similar  laws  have  been  in  many  of  the  States. 

I  have  read  the  two  proposed  laws  upon  the  subject  of  inter-State 
commerce,  one  known  as  tne"  Reagan  Bill"  and  the  Senate  measure 
known  as  the  "  Cullom  Bill,"  and  am  of  the  opinion  that  the  latter  is 
much  the  better  and  more  practical  law. 


RICHARD  P.  MORGAN,  JE.'S,  STATEMENT. 

Statement  of  Richard  P.  Morgan,  of  Dwight,  III.,  ex-railroad  commis- 
sioner of  Illinois. 

So  much  has  been  written  and  spoken  for  more  than  twenty  years 
upon  the  subject  under  investigation  by  your  committee,  that  brief 
opinions  rather  than  long  discussions  would  seem  to  serve  your  com- 
mittee best  in  arriving  at  safe  conclusions.  I  respectfully  reply  in  the 
order  of  your  inquiry — very  briefly. 

(1)  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  discrimina- 
tion by  corporations  engaged  in  inter-State  commerce. 

By  Congressional  control  through  a  commission. 

(2)  The  reasonableness  of  the  rates  now  charged  by  such  corporations  for  local  and 
through  traffic. 

As  a  general  rule,  rates  are  now  unreasonably  low  for  through  and  for 
most  of  the  local  traffic ;  of  course  there  are  some  exceptions. 

(3)  Whether  publicity  of  rates  should  be  required  bylaw;  whether  changes  of 
rates  without  public  notice  should  be  prohibited  and  the  best  method  of  securing  uni- 
formity and  stability  of  rates  ? 

Bates  should  be  made  public,  and  no  change  in  rates  made  without 
reasonable  public  notice ;  this  would  be  one  of  the  best  elements  for  se- 
curing uniformity  and  stability  of  rates. 

(4)  The  advisability  of  establishing  a  system   of  maximum  and  minimum  rates 
for  the  transportation  of  inter-State  commerce. 

The  maximum  rates  would  be  of  necessity  too  high  and  the  minimum 
rates  too  low  to  exercise  satisfactory,  if  any,  control,  else  they  would  at 
times  be  obstructive  and  harmful. 

(5)  The  elements  of  cost,  the  conditions  of  business,  and  other  factors  that  should 
be  considered  in  fixing  tariffs  on  inter-State  traffic. 

Tariffs  should  be  based  mainly  on  a  fair  valuation,  all  things  consid- 
ered, of  the  cost  of  reproducing  the  physical  machine,  and  the  cost  of 
maintaining  and  operating  it,  and  upon  the  average  natural  and  normal 
volume  of  business. 

(6)  Should  any  system  of  rebates  and  drawbacks  be  allowed  T    If  so,  should  such 
transactions  be  regulated  by  law  and  be  subject  to  official  inspection  or  approval,  or 
should  they  be  entirely  prohibited  f 

Rebates  and  drawbacks  should  be  prohibited,  and  all  other  methods 
that  lead  to  secrecy  and  evasion. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  doing  an   inter' 
State  business  be  permitted  or  should  they  be  entirely  prohibited  by  lawf 

Pooling  earnings  or  business  should  be  prohibited  by  law, 


180  INTERSTATE    COMMERCE. 

(8)  Should  provision  be  made  by  law  for  securing  to  shippers  tbe  right  to  select 
the  lines  and  parts  of  lines  over  which  their  shipments  shall  pass? 

If  they  do  not  possess  that  right  in  respect  to  any  common  carrier, 
coach,  steamboat,  railroad,  or  other  means  of  transit,  they  should  be 
invested  with  it  by  act  of  Congress. 

(9)  By  what  method  can  a  uniform  syetem  of  rates  for  the  transportation  of  pas- 
sengers and  freights  by  all  corporations  engaged  in  inter-State  commerce  be  best 
secured  T 

See  answer  to  question  number  5. 

(10)  Should  corporations  engaged  in  inter-State  commerce  be  permitted  to  charge 
a  lower  proportionate  rate  for  a  long  than  for  a  short  haul  f 

Yes  j  under  Congressional  restrictions,  through  the  commissioners. 

(11)  Should  any  concession  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  tho  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  such  concessions  be  made  public  I 

Between  large  and  small  shipments  reasonable  concessions  in  rates 
should  be  made,  and  those  concessions  made  public. 

(12)  Should  corporations  engaged  in  inter-State  commerce  be  required  to  adopt  a 
uniform  system  of  accounts  ? 

Yes ;  that  would  be  a  very  essential  element  in  the  practical  working 
of  a  commission. 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government ;  if  so,  what  information  as  to  their  earnings,  expenses,  and 
operations  should  such  reports  contain  ? 

Such  reports  should  be  made  annually -to  the  Government,  of  all 
things  connected  with  the  construction,  maintenance,  and  operation  of 
the  roads,  as  the  commissioners  might  from  time  to  time  find  essential  in 
carrying  out  the  purposes  of  Congress. 

(14)  In  making  provision  for  securing  cheap  transportation  is  it  or  is  it  not  impor- 
tant that  the  Government  should  deyelop  and  maintain  a  system  of  water  routes  f 

The  natural  system  of  internal  navigation  of  the  country,  in  all  its 
parts  which  can  be  reasonably  deemed  navigable  for  transportation 
purposes,  should  be  thoroughly  maintained — the  construction  of  wholly 
new  channels,  as  canals,  and  the  development  of  minor  water-ways,  not 
naturally  navigable  for  transportation  purposes,  could  not  be  justified, 
and,  therefore,  should  not  be  constructed  or  improved,  except  for  some 
very  special  and  stringent  demand. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  inter-State  commerce  be 
best  enforced  ?    Should  a  commission  or  other  special  tribunal  be  established  to  carry 
out  the  provisions  of  any  law  Congress  may  enact  f 

It  seems  quite  clear  that  the  time  has  arrived  for  Congress,  in  the 
interest  of  the  country  at  large,  to  extend  its  authority  over  the  inter- 
State  commerce  of  our  railway  system,  because  under  the  existing 
management  of  that  commerce  harmful  results  have  already  been  pro- 
duced to  the  people,  to  the  railways,  and  the  capital  invested ;  there  is 
no  confidence  remaining  between  the  various  managements  or  between 
the  people  and  those  managements,  nor  can  there  be  any  re-established. 

The  whole  vast  system  is  afloat,  without  a  rudder,  and  the  most 
sagacious  of  its  managers  are  in  despair  lest  all  should  be  overwhelmed. 

These  conditions  seem  to  be  serious  enough  to  demand  early  action  by 
Congress.  1  firmly  believe  that  a  properly  constituted  commission  is 
the  most  practical  way  of  enforcing  the  will  of  Congress  in  respect  to 
the  inter-State  commerce  of  our  railway  system, 


INTERSTATE    COMMERCE.  181 

E.  CALLAHAN'S  STATEMENT. 

Statement  of  Ettelbert  Callahan,  of  Robinson,  III. 

While  I  am  not  convinced  that  I  can  submit  anything  new  or  very 
important,  I  will  endeavor  to  comply  with  your  request,  giving  you  such 
views  as  I  entertain  and  which  have  grown  out  of  a  general  knowledge 
of  the  subject  acquired  in  my  practice  as  a  country  lawyer,  interming- 
ling hugely  with  that  portion  of  the  people  whose  interests  are  indi- 
vidually small,  but  who  are  extremely  jealous  of  their  rights  and  sensi- 
tive to  any  real  or  supposed  invasion  thereof. 

THE  NECESSITY  FOE  NATIONAL  CONTROL. 

Your  committee  is  charged  with  the  consideration  of  one  of  the  grav- 
est questions  of  American  politics;  a  question  that  calls  for  the  wisest 
statesmanship,  and  courage  sufficient  to  attack  and  overthrow  old  theo- 
ries of  government  and  rules  of  construction  whenever  it  shall  be  dem- 
onstrated  that  they  obstruct  the  path  of  progress.  Even  constitutional 
barriers  may  be  required  to  be  removed  before  the  question  is  fully 
solved.  It  is  a  question  which  has  long  been  kept  in  abeyance  on  ac- 
count of  an  unwillingness  to  disturb  the  existing  state  of  thiugs,  and 
on  account  of  the  difficulties  attending  its  discussion  and  proper  solu- 
tion. But  now  the  changed  and  constantly  changing  condition  of  the 
country  and  its  commerce,  and  the  channels  along  which  that  commerce 
moves  will  not  permit  the  question  to  be  evaded.  While  differences 
exist  as  to  what  measures  should  be  adopted  by  the  national  legislature, 
the  voice  of  the  people  is  rapidly  approaching  unanimity  that  some 
step  must  be  taken  to  place  the  commerce  of  the  nation  under  national 
control.  The  efforts  of  the  States  to  regulate  a  commerce  that  passes 
beyond  the  boundaries  of  the  State  have  proved  ineffectual,  and  it  may 
;is  well  be  conceded  at  once  that  a  national  authority  is  the  only  one 
that  can  regulate  a  national  commerce.  A  broader  construction  of  the 
powers  of  the  National  Government  under  the  Constitution  prevails  now 
than  formerly,  both  in  the  courts  and  iu  the  minds  of  the  people,  and 
it  is  growing  broader  still,  and  will  grow  until  it  is  universally  conceded 
that  every  railroad,  every  canal,  every  water  way,  and  every  telegraph 
line  that  penetrates  into  or  touches  two  or  more  States  shall  be  in  its 
entirety  under  the  sole  control  of  the  National  Government.  And  this 
will  be  the  first  step  of  the  people  towards  "  preventing  the  practice  of 
extortion  and  unjust  discrimination  by  corporations  engaged  in  inter- 
State  commerce." 

The  question  of  the  reasonableness  of  rates  to  be  charged  for  local 
and  through  traffic  will  then  be  submitted  to  and  determined  by  the 
representatives  of  the  people  in  Congress,  and  one  law  and  one  rule  of 
construction  will  exist  in  every  State,  In  this  way  alone  can  reason- 
able stud  uniform  rates  be  established  and  enforced.  It  is  the  only  way 
of  escape  from  the  diversity  of  laws,  constructions,  and  authorities  of  the 
several  States,  now  struggling  with  powers  which  they  have  created 
but  cannot  control.  The  present  system  of  control  by  the  States  leaves 
the  people  and  the  commerce  of  the  people  at  the  mercy  of  the  great  cor- 
porations which  have  grown  up  iu  these  later  years  in  spite  of  all  efforts 
on  the  part  of  the  several  States  to  check  their  growth,  and  keep  them 
in  subordination  to  the  interests  of  the  people.  Pla<5e  every  highway 
and  channel  of  commerce  and  of  commercial  intercourse  under  national 
control,  and  I  submit  that  it  would  break  up  the  system  of  pooling  be- 
tween competing  lines,  and  leave  competition  :o  regulate  charges  wthin 
the  limits  of  "  a  system  of  maximum  and  minimum  rates"  to  be  estab- 


182  INTERSTATE    COMMERCE. 

lished  by  law.  A  minimum  rate  should  be  fixed  to  prevent  a  strong 
competing  line  from  destroying  a  weak  competitor  by  ruinously  low 
rates,  and  then  make  up  its  losses  by  controlling  all  the  business  which 
would  otherwise  have  been  divided  between  it  and  the  weaker  compet- 
ing line.  Publicity  of  rates  should  not  be  required.  Each  corpora- 
tion or  person  engaged  in  inter-State  commerce  should  have  perfect  lib- 
erty to  fix  and  change  its  rates  and  charges  at  pleasure  within  the  lim- 
its of  the  maximum  and  minimum  charges  fixed  by  law.  This  would 
be  "  the  best  method  of  securing  uniformity  and  stability  of  rates,"  so 
far  as  uniformity  and  stability  of  rates  are  attainable  without  destroy- 
ing the  effects  of  fair  competition. 

No  system  of  rebates  or  drawbacks  should  be  allowed.  If  any  such 
are  allowed,  they  should  be  regulated  by  law  and  subject  to  official  in- 
spection and  revision.  All  pooling  agreements  between  competing  lines 
should  be  prohibited  by  law.  The  ettect  of  pooling  has  not  been  satis- 
factory to  the  corporations,  and  is  the  fruitful  source  of  unjust  discrimi- 
nations against  the  commerce  of  the  country.  I  think  the  judgment 
of  the  country  is  clearly  in  favor  of  the  prohibition  by  law  of  all  pooling 
agreements.  There  is  nothing  inequitable  in  allowing  a  lower  propor- 
tionate rate  to  be  charged  for  a  long  than  for  a  short  haul,  but  such  charges 
should  be  so  regulated  by  law  that  a  short  haul  should  never  pay  more 
than  a  haul  of  greater  length. 

It  is  certainly  very  important  that  the  National  Government  should 
develop  and  maintain  a  system  of  water-routes.  The  connection  of  the 
great  northern  lakes  with  the  Mississippi  and  Ohio  Eivers  by  canal 
would  greatly  facilitate  the  carrying  on  of  commercial  business.  Im- 
provements of  like  character  should  be  made  wherever  the  interests  of 
commerce  may,  in  the  judgment  of  Congress,  demand  them.  But  in 
making  such  improvements  it  should  never  be  forgotten  that  the  inter- 
ests of  agriculture  are  not  to  be  sacrificed.  This  is  sometimes  done 
where  it  is  attempted  to  improve  the  navigation  of  rivers  by  means  of 
locks  and  dams.  In  the  level  country  of  the  Mississippi  Valley  large 
areas  of  land  are  usually  dependent  upon  the  streams  for  drainage,  and 
the  time  is  not  far  distant  whea  the  legislatures  and  courts  will  be  com- 
pelled to  pass  upon  the  question  as  to  whether  there  is,  or  can  be,  in 
any  one  the  right  to  obstruct  the  natural  drainage  of  the  country  by 
dams  made  for  any  purpose  whatever. 

A  national  law  embracing  the  subjects  mentioned  in  the  circular  of 
your  committee  would  not  be  more  difficult  of  execution  than  a  State 
law  on  the  same  subject  within  a  State.  A  national  law  would  be  in 
force  over  the  entire  territory  occupied  by  all  the  persons  and  corpora- 
tions engaged  in  inter-State  commerce,  and  would  hold  them  ajl  within 
its  jurisdiction;  and  these  facts  would  tend  to  simplify  its  operation 
and  render  its  execution  easy. 

For  the  execution  of  all  laws  on  this  subject  a  national  commission 
or  tribunal  should  be  created,  with  one  or  more  members  located  in 
each  of  the  several  departments  into  which  the  nation  should  be  divi- 
ded. The  duties  and  powers  of  the  commission  should  be  fixed  by  law. 

The  railroads,  telegraph  companies,  and  all  other  corporations  and 
persons  engaged  in  inter-State  commerce  should  be  required  to  make 
annual  reports  to  the  tribunal  created  to  secure  the  execution  of  the 
law,  and  that  tribunal  should  report  to  the  Government  such  facts  as 
should  from  time  to  time  be  required  by  law  to  be  reported.  Other 
points  suggested  fall  so  entirely  within  the  duties  of  persons  who  are 
skilled  in  the  practical  operation  of  railroads  and  other  means  of  trans- 
porting commercial  commodities  that  I  venture  no  opinion  in  respect  to 
them. 


INTERSTATE   COMMERCE.  183 

JAMES  MIX'S  STATEMENT. 

Statement  of  James  Mix,  of  Kankakee,  III,  president  Karikakee  Ice  Com- 
pany. 

I  have  been  a  producer  and  shipper  all  my  life,  and  think  I  know 
the  wants  of  the  producing  class  and  understand  the  evils  they  are 
laboring  under  and  the  oppressions  they  are  subject  to  by  the  railroad 
companies.  Undoubtedly  you  will  have  abundance  of  information  ln>m 
railroad  officials  decrying  all  attempts  to  regulate  the  charges  of  trans- 
portation as  being  a  governmental  interference  with  private  business. 
Undoubtedly  gentlemen  favored  with  rebates  and  special  rates  have 
told  you  that  there  is  nothing  wrong  in  a  transportation  company  <:iv- 
ing  such  rebates.  Men  apparently  honest,  but  remarkably  innocent, 
will  defend  the  pooling,  iniquity.  But  to  the  great  body  of  fanners, 
miners,  lumbermen,  and  the  retail  merchant  and  country  mechanic,  who 
suppy  their  wants,  such  things  are  gall  and  wormwood,  and  the  in- 
terests of  these  people  are  the  ones  which  need  the  protection  of  the 
National  Government.  The  railroad  companies  need  no  further  pro- 
tection than  they  now  have.  A  system  which  has  made  it  possible  for 
a  few  men  to  count  their  fortunes  by  the  hundred  millions,  all  made 
out  of  railroads^  requires  no  further  fostering  care  of  a  paternal  govern- 
ment. The  men,  the*producers,  from  whom  these  vast  sums  have  been 
extorted  by  combination,  excessive  rates,  and  stock  composed  almost 
wholly  of  water,  are  the  people  whose  voice  must  be  heeded.  Trans- 
portation rates  are  unnecessarily  high  in  Illinois,  and  a  State  commis- 
sion is  powerless  to  correct  the  evils.  By  reason  of  water  transporta- 
tion the  rate  on  fourth-class  freight  from  Chicago  to  New  York  is  15 
cents  per  hundred,  being  a  haul  of  about  1,000  miles.  As  large  a  sum 
is  taken  in  Illinois  for  carrying  the  same  freight  in  the  State  75  to 
100  miles.  Now  the  haul  in  the  State  of,  say,  100  miles  does  not  cost 
as  much  as  the  haul  of  1,000  miles.  To  charge  as  much  for  the  haul  of 
100  miles  in  the  state,  as  is  charged  for  the  haul  of  1,000  miles  out  of  the 
State  cannot  be  defended  one  moment,  and  no  one  with  any  pretense 
of  honesty  pretends  to  defend  it.  Frequently  the  country  merchant 
is  charged  from  three  to  five  times  more  Irorn  Chicago  to  his  station, 
situated  50  to  150  miles  out  of  Chicago,  than  is  charged  for  the  same 
goods  from  points  as  far  east  as  Albany,  N.  Y,,  Springfield,  Mass.,  and 
other  New  England  points.  A  State  commission  is  powerless  to  inter- 
lere  beyond  the  state  lines. 

These  illustrations  show  that  the  charges  are  too  high  in  the  State, 
and  that  a  national  control  is  the  only  power  that  can  reach  the  matter. 
State  lines  should  have  no  more  weight  in  settling  transportation  rates 
iu  the  nation  than  county  lines  in  the  State.  By  all  means  publicity 
of  rates  should  be  required  by  law,  and  not  subject  to  fluctuation  with- 
out a  notice  of  change  being  made  for  a  certain  time.  I  wish  to  illus- 
trate the  injustice  of  secret  rates.  I  represented  a  coal  company  en- 
gaged iu  mining  coal  for  the  Chicago  market.  A  rival  company  opera- 
ted a  mine  at  the  same  place.  The  coal  was  hauled  over  the  Illinois 
Central  Eailroad,  in  car-load  lots,  placed  on  board  the  cars,  and  went 
in  the  same  train,  assurance  being  given  me  that  my  company  should 
have  the  same  rates  as  any  other  company.  Each  company's  coal  was 
billed  to  Chicago  at. $1.36  per  ton.  The  rival  company  then  had  a 
secret,  MTit^en  Contract  with  the  railrqad.  by  which  it  was  to  pay  :.H)  per 
cent.  Ireight  on  what  the  coal  sold  for,  which  resulirdin  getting  its  coal 
hauled  for  75  cents  per  ton,  against  $1.30  per  ton  charged  me.  \\hut 
was  done  in  this  case  may  be  done  in  any  other  case,  and  it  is  believed 


184  INTERSTATE   COMMERCE. 

it  is  being  practiced  daily  by  the  railroads  in  this  State.  By  a  national 
law  such  secret  contracts  should  be  made  a  penal  offense,  and  nothing 
less  than  a  national  law  will  correct  the  evil. 

I  think  maximum  rates  for  inter-State  commerce  should  be  established 
by  law.  Every  shipper  should  know  in  advance  the  maximum  rate  he  can 
be  charged,  and  all  shippers  should  be  treated  alike.  Equality  is  equity. 
In  regard  to  minimum  rates  for  freight  and  passengers,  I  would  make 
tins  suggestion :  Kate  wars  are  disastrous  to  the  public  welfare  and 
should  never  exist,  and  are  gotten  up  by  strong  companies  to  crush 
weak  ones.  I  would  provide  by  law  that  the  lowest  rate  charged  by 
railroads  for  passengers  or  freight-  between  any  two  points  should  be 
the  absolute  rate  for  the  next  ensuing  year,  and  a  proportionate  sum 
for  all  intermediate  points.  Eailroads  will  not  cut  rates  under  such  a 
law  to  any  alarming  extent. 

It  is  remarkable  that  the  question  is  asked  whether  rebates  and  draw- 
backs should  ever  be  allowed  ?  The  very  fact  that  rebates  and  draw- 
backs are  made  secret,  that  one  rate  is  made  to  all  alike,  and  by  a  dark- 
lantern  arrangement  a  portion  is  paid  back,  condemns  the  principle. 
If  it  was  not  a  dishonest 'transaction  it  would  be  done  openly.  At  Kau- 
kakee  two  firms  were  engaged  in  quarrying  stone  and  burning  lime. 
The  quarries  were  side  by  side.  The  pric6  of  labor  and  the  price  of  fuel 
used  in  producing  lime  were  identical,.  One  company  did  asplendid  lime 
business  as  far  south  as  200  miles  on  the  Illinois  Central  Railroad. 
The  other  firm  lost  money  on  the  same  quality  of  lime  placed  in  the  same 
towns  and  had  to  go  out  of  business.  He  did  not  know  what  was  the 
matter  with  him.  His  business  died  from  a  bad  attack  of  rebates  and 
drawbacks.  As  soon  as  this  was  accomplished  his  rival  advanced  the 
price  of  lime,  which  injuriously  affects  all  consumers.  It  is  well  known 
that  the  large  dealers  in  breadstuffs  and  meats  in  Chicago  make  large 
gains  by  the  system.  No  rebates  are  ever  extended  to  the  farmer  who 
produces  the  wheat,  corn,  and  pork.  He  therefore  is  compelled  to  sell 
the  great  combinations  who  have  these  favors  extended  them.  And  a 
kindred  iniquity  to  rebates  is  the  pooling  plan.  Pooling  violates  every 
business  principle.  Suppose  all  the  grain-buyers  in  a  country  town 
should  pool  their  business  and  divide  the  earnings  on  a  basis  of  per- 
centage to  each  firm,  whether  it  handled  any  grain  or  not,  would  any 
one  be  found  to  defend  it  ?  Pooling  is  a  violation  of  the  common  law  ; 
and  without  any  statute  the  grand  juries  should  proceed  to  indict  all 
men,  whether  railroad  freight  agents  or  other  sinners,  who  are  guilty 
of  the  offence.  It  is  not  only  injurious  to  the  public,  but  it  is  a  rob- 
bery of  stockholders  in  roads  which  earn  dividends,  by  taking  their 
earnings  and  dividing  them  without  their  consent  and  without  anycou- 
sideration  with  the  stockholder  who  has  invested  his  money  in  a  piece 
of  poor  property.  As  long  as  pooling  is  permitted,  non-paying  loads 
will  be  built  to  compel  the  paying  roads  to  purchase  them  at  a  big  ad- 
vance, or  give  them  a  part  of  their  earnings  In  conclusion,  permit  me 
to  say  the  laws  regulating  the  railroads  in  this  State  are  as  good  as  any 
laws  on  this  subject  that  I  know  of,  if  enforced.  They  have  been  sus- 
tained by  the  courts.  Perhaps  a  national  law  embodying  these  provi- 
sions of  the  Illinois  laws  and  their  principles,  so  far  as  applicable,  would 
be  a  good  means  to  accomplish  the  end  in  view.  This  will  require  a 
national  board  of  commissioners.  If  all  the  States  had  a  board  of  com- 
missioners, the  chairman  of  the  respective  boards  might  be  created  into 
a  national  board.  By  this  means  the  State  and  national  system  may  be 
combined,  and  what  is  lacking  in  the  one  may  be  supplied  in  the  other, 
and  out  of  it  all  justice  may  be  done  to  the  producer,  the  consumer, 
and  the  carrier. 


INTERSTATE   COMMERCE.  185 

J.  M.  HAMILTON'S  STATEMENT. 
Statement  of  J.  M.  Hamilton,  Nashville,  Tenn. 

(I)  The  best  method  of  preventing  extortion  and  discrimination  will 
be  to  encourage  the  building  of  more  railroads,  so  that  two  or  more 
lines  will  eventually  tap  all  the  commercial  centers,  and  then  prohibit 
all  corporations  from  entering  into  combinations  to  fix  the  rates  of 
transportation.     Unrestrained  competition  will  regulate  and  equalize 
rates  better  than  the  law. 

(l>)  Where  there  are  more  roads  than  one  and  no  combinations  or 
"  pools,"  my  information  is  that,  all  things  considered,  the  local  rates  are 
about  as  reasonable  as  the  through. 

(3)  Publicity  of  rates  or  charges  is  not  necessary.     Uniformity  and 
stability  of  rates  would  be  better  secured  by  unrestrained  competition 
than  in  any  other  way.     1  don't  know  of  any  other  way  it  can  be  done. 

(4)  I  don't  think  any  good  would  result  from  establishing  maximum 
ami  minimum  rates. 

(5)  The  actual  cost  of  the  road,  the  cost  of  operating,  and  the  amount 
of  business  done,  as  represented  by  the  gross  receipts,  should  be  con- 
sidered in  fixing  the  tarift's. 

(C)  Eebates  and  drawbacks  should  be  allowed,  and  they  should  not 
be  regulated  by  law  nor  subject  to  official  inspection  or  approval. 

(7)  Pooling  contracts  and  combinations  of  railroads  with  the  view  of 
fixing  through  and  local  rates  should  not  be  permitted  either  directly 
or  indirectly,  but  should  be  prohibited  by  law. 

(8)  Provision  should  be  made  by  law  for  securing  to  shippers  the 
light  to  select  the  lines  over  which  their  shipments  shall  be  trans- 
ported. 

(9)  A  uniform  system  of  rates  for  the  transportation  of  passengers 
and  freights  cannot  be  secured  either  by  law  or  gosple,  but  it  can 
best  be  approximated  by  increasing  competition  and  preventing  pools 
and  combinations,  and,  if  such  a  thing  could  be  done,  by  prohibiting  any 
one  corporation  from  owning,  controlling,  or  operating  more  than  one 
through  line. 

(10)  Railroads  should  for  many  pertinent  reasons  be  permitted  to 
charge  lower  rates  for  long  than  for  short  hauls.     I  don't  think  the  pub- 
lic interest  could  be  benefited  by  legislation  on  this  point,  although 
there  is  probably  more  complaint  made  on  this  point  than  on  any  other 
point  under  consideration.     All  the  corporations  can  afford  a  less  rate 
on  a  long  haul  than  on  a  short  one.     I  don't  think  the  public  interest 
requires  any  legislation  on  this  point. 

(II)  Concessions  should  be  allowed  to  large  shipments  over  small 
ones,  because  it  is  a  law  of  trade  that  the  larger  the  amount  involved 
in  any  transaction  the  lower  the  rate  of  per  cent,  of  profit.    This  rule 
will  hold  good  in  every  business  transaction  ;  don't  see  that  any  good 
would  result  from  publishing  the  same. 

(12)  I  don't  see  how  a  law  could  be  framed  requiriug  corporations  to 
adopt  a  uniform  system  of  accounts  ;  don't  think  any  good  would  result 
from  it. 

(13)  I  don't  think  it  would  be  desirable  to  require  corporations  to 
make  annual  reports  to  the  Government.     I  believe  that  all  the  corpo- 
rations are  now   required    by  their  stockholders  to  make  an  annual 
showing  of  their  business.    In  this  way  all  the  desired  information  can 
be  obtained. 

( 14)  It  is  of  the  very  greatest  importance  that  the  Government  should, 
in  making  provision  for  securing  cheap  transportation,  use  all  means 


186  INTERSTATE   COMMERCE. 

in  its  power  to  develop  and  maintain  a  system  of  water  routes.  The 
transportation  by  water  is  now  the  only  free  mode  of  transportation 
which  is  left  to  the  people.  Everything  should  be  done  by  the  Govern- 
ment which  can  be  done  to  make  every  stream  which  is  now  navigable 
only  a  part  of  the  year  navigable  all  the  year  round.  This  would  ef- 
fectually place  the  poor  man  beyond  the  reach  of  steamboat  and  rail- 
road combinations  and  rings.  It  would  enable  him  to  throw  his  little 
Hat-boat  on  the  water  and  float  his  products  to  market  almost  abso- 
lutely free  of  cost  at  any  season  of  the  year.  This  condition  of  things 
would  develop  the  resources  of  the  lands  contiguous  to  our  streams  a 
hundredfold ;  our  farmers  would  be  encouraged  to  increase  the  num- 
ber of  articles  produced  for  market;  our  miners  would  be  able  to  corn- 
ply  with  their  contracts  with  their  minerals  as  they  are  taken  out  of  the 
earth,  without  waiting  nine,  six,  or  five  months  for  a  rise  in  the  river. 
Manufactories  would  spring  up  all  along  these  wrater  courses,  and  the 
prosperity  of  the  country  would  be  greatly  increased.  I  would  say  by 
all  means  maintain  a  system  of  free  navigation  in  our  numerous  water 
routes. 

(15)  With  the  little  reflection  that  I  have  been  able  to  give  this  ques- 
tion, I  don't  think  that  I  am  able  to  give  an  intelligent  answer  to  it. 
As  a  general  thing,  the  established  courts'  of  the  country  are  the  best 
tribunals  to  enforce  the  laws  enacted  by  the  Congress,  it  is,  however, 
possible  that  a  commission  or  special  tribunal,  established  for  the  specific 
purpose  of  enforcing  these  laws,  might  answer  a  better  purpose.  The 
danger  in  the  latter  case  would  be  that  the  corporations  would  or  might 
sooner  or  later  get  control  of  the  commission  and  influence  or  use  them 
for  sinister  purposes. 


M.  C.  WOODRUFF'S  STATEMENT. 

Statement  of  M.  G.  Woodruff,  of  Dubuque,  Iowa,  former  railroad  commis- 
sioner. 

(1)  The  best  method  of  preventing  extortion  and  unjust  discrimi- 
nation is  by  the  instrumentality  of  a  national  commission,  with  power 
to  institute  suits  in  the  name  of  the  Government  for  enforcement. 

(2)  Bates,  both    through  and  local,  as  a  rule,  are  now  more  than 
"  reasonable."    It  is  safe  to  say  that  the  present  average  charge  through-* 
out  the  country  will  not  yield  more  than  1  per  cent,  above  interest  and 
operating  expenses.     Omitting  isolated  and  exceptional  cases,  there 
never  was  less  ground  for  complaint  against  rates  than  now. 

(3)  Publicity  of  rates  should  be  required  by  law,  and  changes  with 
out  30  days'  notice  conspicuously  posted  should  be   prohibited,  both 
of  which  tend  to  uniformity  and  stability  of  rates.     Light  is  a  better 
security  against  wrong-doing  than  a  brigade  of  police  in  the  dark. 

(4)  Neither  maximum  nor  minimum  rates  should  be  established  by 
law.    No  congress  is  capable  of  justly  determining  a  matter  that  is  so 
constantly  affected  by  circumstances  which  no  one — not  even  the  rail- 
way expert — can  foresee.     If  legislation  aims  to  promote  the  general 
welfare,  can  it  secure  this  result  by  acts  unfriendly  to  a  form  of  un- 
changeable investment  representing  about  one-seventh  of  the  entire 
wealth  of  the  country?     A  fair  maximum  rate  for  a  road  that  earns 
$30,000  gross  per  mile  per  annum  would  be  practical  confiscation  to 
another  earning  $5,000  to  $8,000.     If  a  graduated  scale  of  maximum 
rates,  adjusted  upon  earnings,  be  prescribed,  the  law  is  made  to  assist 
sections  and  communities  Best  able  to  pay  a  high  rate,  and  imposes 


INTERSTATE   COMMERCE.  187 

harder  burdens  upon  those  most  in  need  of  the  fostering  care  of  gov- 
ernment. It  is  only  on  local  business  that  the  hand  of  the  law  rests. 
yet  the  inter  State  rates,  under  the  more  rigorous  law  of  competition,  aiv 
relatively  the  lowest. 

(5)  As  these  "elements,"  "conditions,"  and  "other  factors"  vary  so 
greatly, it  is  practically  impossible  to"  fix  the  tariffson  inter  State  traffic." 
The  nearest  practicable  approach  to  fixed  rates  is  "reasonable  rat • 
determinate  in  groups  of  kindred  cases  by  the  intelligent  discretion  of 
a  competent  commission. 

(6)  Rebates  and  drawbacks  ought  to  be  strictly  prohibited.     Indirec- 
tion and  circuity  invite  and  pave  the  way  to  infractions  of  the  law  and 
provoke  suspicions  that  undermine  public  confidence.     The  straight 
way  is  the  honest  way,  and  in  the  nature  of  things  must  be  the  best  in 
the  long  run. 

(7)  If  fixed  rates  are  to  be  established  by  law,  "pooling  contracts" 
and  "agreements  between  roads"  are  futile.     If  a  supervision  of  the 
business  is  left  in  the  sound  discretion  of  a  commission,  pooling  agree- 
ments may  rest  in  the  same  discretion. 

(8)  Every  shipper  should  have  the  undisputed  right  to  choose  the 
lines  by  which  his  business  is  to  be  done.    Confidence  is  a  primary 
element  of  business,  and  to'  deny  the  right  to  choose  is  to  breed  dis 
content. 

(9)  The  same  rules  of  open  competition  that  apply  to  the  business  of 
individuals  is  the  best  promoter  of  and  security  for  uniform  rates,  sub 
ject,  however,  to  such  discretionary  supervision  as  lawful  control  logic- 
ally implies  and  justifies. 

(10)  A  lower  proportionate  rate  for  a  shorter  haul  should  not  be  pro- 
hibited, but  this  rate  should  in  no  case  be  greater  than  the  through 
charge. 

(11)  Concessions  of  rates  to  large  shippers  as  against  small  shippers 
should  not  be  allowed  beyond  the  difference  in  cost  of  hauling,  and  all 
such  concessions  should  be  as  public  as  any  other  rate. 

(12)  A  uniform  system  of  railway  accounts  being  necessary  to  any 
successful  system  of  public  control,  it  should  be  required  by  law.    To 
do  otherwise  is  to  add  complications  where   simplicity  should  be  the 
constant  aim. 

(13)  All  railways  should  be  required- to  make  correct  annual  reports 
to  the  Government,  such  as  are  now  rendered  in  many  of  the  States. 

(14)  The  National  Government  can  devise  no  method  tending  so 
surely  to  cheapness,  uniformity,  and  expedition  of  rail  transportation 
as  that  of  a  judicious  system  of  water  routes. 

(15)  A  national  commission,  sufficiently  paid  to  insure  the  best  talent 
of  the  country,  is  the  best  system  of  public  management.     In  this  there 
is  enough  of  'elasticity  and"  discretion  to  allow  fail-  play  to  the  varied 
and  varying  circumstances  that  will  ever  appear  in  any  and  every  busi- 
ness which  includes  in  its  operations  the  multitude  of  insurmountable 
differences  that  present  themselves  in  a  country  so  varied  in  resources, 
in  density  of  population,  in  character  of  shipments,  and  in  distance  of 
ultimate  markets  as  ours. 

Finally,  a  law  as  searching,  exacting,  and  rigorous  as  the  national 
bank  law  should  be  enacted  in  relation  to  capitalizing  railways.  Capi- 
talization beyond  actual  cost,  which  should  include  permanent  better- 
ments only  when  made,  ought  to  be  prohibited  under  the  severest 
penalties.  This  done  and  observed,  one-half  of  the  present  difficulties 
of  the  railroad  problem  would  be  overcome.  Over-capitalization  is  a 
swindle  upon  both  investors  and  t  he  entire  public.  It  exemplifies  public 
dishonesty  and  precipitates  national  panics  and  distress. 


188  INTERSTATE   COMMERCE. 

THOMAS  UPDEGRAFF'S  STATEMENT. 

Statement  of  Thomas  Updegraff,  of  McGregor,  Iowa. 

After  careful  consideration  of  the  circular  of  the  committee  I  can  vent- 
ure to  say  but  little. 

(1)  To  the  tenth  inquiry  I  have  no  hesitation  in  saying  that  the  cheap- 
ness of  the  long  haul  should  in  no  manner  be  interfered  with. 

(2)  To  the  fourteenth  I  say  emphatically,  yes.    The  history  of  trans- 
portation between  Chicago  and  the  seaboard,  establishes  the  value  of 
water  routes.    The  water  routes  from  the  Atlantic  to  Chicago  should 
be  extended  to  the  Mississippi  by  means  of  the  Hennepin  or  other  sim- 
ilar canal  at  whatever  cost;  and  wherever  a  water  route  can  be  devel- 
oped which,  in  proportion  to  its  cost,  can  offer  to  railroads  one-half  of 
the  competition  of  which  such  a  canal  as  the  Hennepin  is  capable,  it 
should  be  opened  and  maintained  by  the  General  Government.    The 
bulk  of  inter-State  commerce  runs  in  a  few  general  directions  converg- 
ing on  to  a  very  few  lines.     If  the  General  Government  can  by  a  few 
water  routes  give  relief  here,  may  not  the  States,  constitutionally,  be 
equal  to  what  is  left  to  be  done  !    I  have  more  faith  in  water  routes  as 
cheapness  of  transportation  on  inter-State  commerce  than  in  all  other 
suggested  means. 

(3)  As  to  the  fifteenth  inquiry :  For  the  present,  as  a  tentative  project, 
I  would  favor  a  commission. 


J.  0.  BEOEKSMIT'S  STATEMENT. 

Statement  of  J.  C.  Broeksmit,  of  Cedar  Rapids,  Iowa,  auditor  of  the  Bur- 
lington, Cedar  Rapids  and  Northern  Raihcay  Company. 

Volumes  have  been  written  and  published  upon  these  knotty  ques- 
tions. The  theory  of  most  of  them  sounds  well,  but  the  best  way,  in  my 
humble  opinion,  would  be  to  bring  some  of  these  theories  into  practice, 
and  then  from  time  to  time  improve  on  them  as  circumstances  and  ex- 
perience may  dictate. 

(1)  The  best  method  of  preventing  the  practice  of  extortion  and  unjust  discrimi- 
nation by  corporations  engaged  in  inter-State  commerce. 

Strict  adherence  to  printed  and  published  tariffs,  made  up  under  the 
supervision  of  a  Government  committee,  the  members  of  which  ap 
pointed  for  each  State  should  hold  appointment  for  life. 

(2)  The  reasonableness  of  the  rates  now  charged  by  such  corporations  for  local  and 
through  traffic. 

In  many  instances  rates  on  through  traffic  do  not  pay  for  the  expense 
of  hauling,  while  in  some  localities  local  rates  are  seemingly  unjust. 

(3)  Whether  publicity  of  rates  should  be  required  by  law;  whether  changes  of 
rates  without  public  notice  should  be  prohibited,  and  the  best  method  of  securing 
uniformity  and  stability  of  rates. 

The  publicity  shoul  1  be  required  by  law  ;  changes  without  publicity 
should  be  prohibited.  The  best  method  is  answered  under  question 
No.  1. 


INTERSTATE    COMMERCE.  189 

(4)  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  inter-State  commerce. 

Owing  to  the  diversity  of  cost  in  operating  railroads  a  system  of  max- 
imum and  minimum  rates  would  be  advisable. 

(5)  The  elements  of  cost,  the  conditions  of  business,  and  other  factors  that  should 
be  considered  in  fixing  the  tariffs  on  inter-State  traffic. 

Cost  of  operating  and  terminal  facilities  should  be  considered. 

(6)  Should  any  system  of  rebates  and  drawbacks  be  allowed  ?    If  so,  should  such 
transactions  be  regulated  bylaw  and  be  subject  to  official  inspection  or  approval? 
Or  should  they  be  entirely  prohibited  T 

No  system  of  rebates  and  drawbacks  should  ever  be  allowed.  It 
should  be  entirely  prohibited. 

(7)  Should  pooling  contracts  and  agreements  between  railroads  doing  an  inter-State 
business  be  permitted,  or  should  they  be  entirely  prohibited  by  law  t    If  they  should 
be  regulated  bylaw,  would  it  be  sufficient  to  require  the  terms  of  such  agreements  to 
be  made  public  and  subject  to  official  approval? 

A  paying  tariff  in  equity,  established  to  protect  all  interested,  would 
make  pooling  contracts  unnecessary,  and  these  should  not  be  tolerated. 

(8)  Should  provision   be  made  by  law  for  securing  to  shippers  the  right  to  select 
the  lines  and  parts  of  lines  over  which  their  shipments  shall  be  transported  f 

No. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  pas- 
sengers and  freights  by  all  the  corporations  engaged  in  interstate  commerce  be  best 
secured  T 

By  a  method  of  co-operation  and  consultation. 

(10)  Should  corporations  engaged  in  interstate  commerce  be  permitted  to  charge  a 
lower  proportionate  rate  for  a  long  than  a  short  hanlT    Does  the  public  interest  re- 
quire any  legislation  on  that  subject? 

They  should  be  permitted  to  charge  lower  for  longer  than  short  hauls. 
This  could  be  provided  for  in  the  tariff. 

(11)  Should  any  concessions  in  rates  be  allowed  to  large  shippers  except  such  as 
represent  the  actual  difference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  such  concessions  be  made  known  to  the  public  f 

Concessions  in  rates  should  be  allowed  to  large  shippers.  All  trans- 
actions relating  to  transportation  should  be  open  and  above-board,  so 
that  all  could  avail  themselves  alike  of  the  opportunities. 

(12)  Should  corporations  engaged  in  interstate  commerce  be  required  to  adopt  a 
uniform  system  of  accounts? 

Uniformity  in  accounts  would  be  desirable. 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  re- 
ports to  the  Government?    If  so,  what  information  as  to  their  earnings,  expenses, 
and  operations  should  such  reports  contain? 

Annual  reports  could  be  made  to  the  Government,  somewhat  the 
same  as  are  now  annually  published  by  the  railways  for  distribution  to 
the  stockholders  and  the  press. 

(14)  In  making  provision  for  securing  cheap  transportation,  is  it  or  is  it  not  im- 
portant that  the  Government  should  develop  and  maintain  a  system  of  water  routes? 

The  developments  and  maintenance  of  water  routes  by  the  Govern- 
ment is  not  important  on  account  of  the  very  slow  mode  of  transporta- 
tion by  these  routes  and  the  expensive  cost  for  the  Government  to  de* 
velop  and  maintain  them, 


190  INTERSTATE    COMMERCE. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  interstate  commerce  be 
best  enforced  I  Should  a  commission  or  other  special  tribunal  he  established  to  carry 
out  the  provisions  of  any  law  Congress  may  enact  ? 

By  fines.  A  commission  shonld  be  established  in  each  State  or  Ter- 
ritory where  railroads  are  operated  to  carry  out  the  provisions  of  any 
law  Congress  may  enact.  It  should  be  a  Government  commission. 


J.  D.  HAYES'S  STATEMENT. 
Statement  of  J.  D.  Hayes,  of  Detroit,  Mich. 

Having  had  twenty-five  years  practical  working  in  the  railroading 
commerce  of  the  country,  as  manager  of  the  Blue  Line,  assistant  su- 
perintendent of  the  Michigan  Central  Railroad,  and  upon  the  Grand 
Trunk  Railway  of  Canada,  and  having  made  interstate  commerce  a 
study  for  some  years  past,  enables  me  to  speak  with  some  confidence 
upon  the  subject.  I  would  have  been  glad  to  have  had  an  opportunity 
to  have  given  information  such  as  might  have  some  practical  bearing 
upon  the  system  as  now  conducted,  as  compared  with  what  might  and 
should  be  done  under  the  supervision  of  Government  commissioners  of 
"interstate  commerce"  for  regulating  business  under  a  wise  sytem  of 
United  States  laws. 

Labor  strikes  will  in  the  future  have  some  very  complicated  ques- 
tions of  responsibility  for  settlement  for  the  property  destroyed  at  ex- 
posed points,  where  property  belonging  to  the  citizens  of  several  States 
and  to  those  of  foreign  countries  may  be  accumulated  by  reason  of  the 
strike.  For  example,  the  State  of  Michigan  chartered  the  Detroit, 
Chicago  and  Canada  Grand  Trunk  Junction  Railway  Company.  That 
company  never  intended  to  operate  or  equip  the  road,  but  built  it  ex- 
pressly to  lease  to  the  Grand  Trunk  for  nine  hundred  and  ninety-nine 
years.  The  ground  upon  which  the  buildings  are,  and  where  all  the 
business  of  the  Grand  Trunk  and  the  Chicago  and  Grand  Trunk  Rail- 
ways is  done  at  Port  Huron  is  upon  what  was  United  States  Govern- 
ment military  reservation.  Neither  the  city  of  Port  Huron  nor  the  State 
of  Michigan  ever  had  any  control  or  jurisdiction  upon  that  ground,  and 
the  United  States  have  no  force  there  to  give  protection  to  persons  or 
property.  Where  is  the  authority  or  power  to  come  from  to  put  down 
A  labor  riot  or  for  the  payment  of  damages  for  property  destroyed  other 
ihan  vhe  inferred  liability  of  the  foreign  lessees  of  this  local  road,  do- 
ing a  very  extensive  interstate  and  international  commerce  under  the 
tocal  laws  of  the  State  of  Michigan! 

The  Michigan  Central  Railroad  was  originally  built  by  the  State,  but 
sold  to  the  present  company  they  were  granted  a  special  charter, 
special  exemptions  from  taxation  by  city,  county,  or  municipal  au- 
thority. Hence  they  are  not  entitled  to  police  protection  from  the  city 
of  Detroit  or  other  towns  in  the  State.  From  the  accumulation  of  in- 
terstate trade  during  a  strike,  a  very  great  destruction  of  property  may 
occur,  nearly  the  whole  being  the  property  of  the  citizens  of  the  several 
States  and  foreign  countries.  The  company  would  have  to  call  upon 
the  governor  of  the  State  first  for  aid;  the  State  militia  would  have  to 
be  furnished,  and  some  of  them  transported  over  the  very  road  which 
could  not  be  operated  on  account  of  the  strike.  Should  the  governor 
not  be  able  to  control  the  disturbance,  he  in  turn  would  call  upon  the 
President  of  the  United  States  for  aid.  The  President,  from  his  official 
headquarters  at  Washington,  would  issue  his  proclamation  to  those  la- 


INTERSTATE    COMMERCE.  191 

borers  engaged  in  burning  and  destroying  interstate  commerce  at  De- 
troit to  disperse  within  a  given  time.  If  this  is  not  done  the  Secretary 
of  War  at  Washington  will  call  out  the  United  States  troops  at  Detroit, 
who  were  all  the  Lime  within  sight  of  the  railroad  yards,  i-iobably  e\e 
witnesses  of  the  disturbance,  and  could  have  been  upon  the  ground  fully 
armed  and  equipped  within  thirty  minutes  from  first  outbreak,  but  under 
present  regulations  could  not  interfere  with  the  matter  until  the  State 
authorities  fail.  Yet  there  would  have  been  no  strike,  nor  any  considera 
bie  number  of  men  there,  had  there  been  no  other  property  there  to  be 
handled  than  what  came  from  the  State  of  Michigan.  Suppose  the 
same  state  of  things  should  occur  upon  the  property  in  Detroit  of  the 
Union  Depot  Company,  which  is  a  local  company,  owning  nothing  but 
the  grounds,  elevator,  and  passenger  buildings,  and  which  probably 
could  not  in  any  case  be  held  as  a  railroad  company,  neither  could  the 
railroad  company  collect  a  very  large  sum  from  the  "depot  company,'' 
the  contracting  road,  say.  being  the  Wabash,  which  is  in  the  hands  of 
a  receiver,  with  stock  at  -NV  cents  on  the  dollar.  Would  a  foreign  owner 
of  property  call  upon  the  "Union  Depot  Company  "  or  this  virtually 
bankrupt  road,  or  the  State  of  Michigan,  the  city  of  Detroit,  or  the 
United  States  Government,  which  had  troops  within  ten  minutes' march 
of  the  disturbance,  and  could  have  given  ample  protection  to  property, 
but  failed  to  do  so  1 

In  the  matter  of  interstate  commerce  upon  the  navigable  rivers  of  the 
country,  the  jurisdiction  of  the  several  States  along  the  course  of  navi- 
gable rivers  should  be  fully  established.  Suppose  the  States  of  Iowa, 
.Missouri,  and  Nebraska  were  to  grant  the  ri^ht  to  construct  bridges 
over  the  Missouri  and  Mississippi  Rivers  within  their  States  which 
would  obstruct  navigation.  The  rights  of  the  citizens  of  the  other 
States  both  north  and  south  of  those  States  would  be  interfered  with 
without  their  consent.  It  would  clearly  be  within  the  power  of  Congress 
alone  to  grant  such  rights,  and  the  laws  of  those  States  giving  such 
rights  would  be  declared  unconstitutional  and  void  by  the  Supreme 
Court  of  the  United  States. 

Take  the  Delaware  1'iver,  with  Maryland  on  one  side,  New  Jersey 
upon  the  other.  If  each  of  those  States  held  jurisdiction  to  the  center 
of  the  river,  an  obstruction  would  benefit  the  ports  of  Baltimore,  Wil- 
mington, and  Jersey  City — by  being  kept  closed — while  the  port  of  Phil- 
adelphia, being  in  the  State  of  Pennsylvania,  might  have  no  jurisdic- 
tion whatever;  yet  all  the  people  doing  business  through  that  port, 
both  in  the  United  States  and  the  outside  world,  would  be  interested 
in  having  the  obstruction  removed  with  the  least  possible  delay. 
Therefore  Congress  should  have  its  jurisdiction  folly  established  upon 
all  rivers  doing  business  within  the  several  States  upon  their  borders, 
such  rivers  as  the  Ohio,  Mississippi,  Missouri,  Delaware,  and  others. 

I  hold  that  no  individual  State  has  any  right  whatever  to  legislate 
upon  anything  which  is  an  interference  with  the  rights  of  citizens  of 
any  other  State  or  country.  And  that  the  United  States  should  have 
dearly  defined  laws  to  regulate  all  interstate  commerce  upon  the  lakes, 
rivers",  canals,  and  railroads  of  the  country,  with  commissioners  in  the 
large  centers  of  business  to  see  that  such  laws  are  faithfully  carried 
out ;  and  that  a  sufiicient  force  of  United  States  troops  should  be  kept 
at  points  where  in  the  natural  course  of  transit  vast  amounts  of  property 
from  the  several  States  n-ay  accumulate  and  be  liable  to  be  destroyed 
by  mob  violence,  for  which  the  city,  or  county,  or  State  may  have  little 
or  no  interest  whatever,  as  about  i)-3  per  cent,  of  all  such  movement  of 
property  is  interstate  commerce, 


192  INTERSTATE    COMMERCE. 

CHAELES  H.  ALLEN'S  STATEMENT. 
Statement  of  Charles  H.  Allen,  of  New  Orleans,  La. 

The  point  at  issue  between  the  people  and  the  railroads  resolves  itself 
into  the  use  of  arbitrary  tariffs.  Local  tariffs  are  absolutely  arbitrary, 
and  in  many  instances  tyrannical  to  extortion.  When  local  tariffs  are 
appended  to  a  through  bill  of  lading  it  assumes  the  position  of  an  arbi- 
trary. All  connecting  lines  are  compelled  in  contracting  for  freight  to 
recognize  the  existence  of  an  arbitrary.  Hence  tyrannical  extortion  is 
carried  on  extensively,  seriously  affecting  all  interior  points. 

Having  had  over  twenty  years'  experience  in  railroad  service  (in  in- 
terior positions),  I  am  led  to  suggest  in  the  interest  of  the  outraged  in- 
terior, or  customers  residing  at  local  stations,  the  legal  destruction  of 
this  abominable  tyranny  by  establishing  the  doctrine  of  prorating  all 
freights  from  points  of  departure  to  destination  throughout  the  country. 
Without  entering  into  an  argument  in  extenso,  I  assure  the  committee 
that  an  investigation  of  the  merits  of  the  method  would  happily  adjust 
the  present  difficulty  and  establish  a  better  feeling  between  the  people 
and  these  great  corporations,  for  at  once  it  would  place  all  local  busi- 
ness on  a  plane  of  competition  by  which,  though  the  distance  may  be 
increased,  the  rate  would  be  decreased.  At  all  commercial  points  there 
are  diverging  lines  of  railroads  which  could  and  would  compete  with 
each  other  for  local  business,  distributing  the  business  at  termini,  where 
the  local  point  could  be  reached  under  a  pro  rata  contract  obtained  by 
competition.  This  will,  I  am  satisfied,  regulate  the  commerce  of  the 
country  in  a  manner  more  satisfactory  than  by  attempting  to  establish 
maximum  or  minimum  rates.  This  is  equitable  and  just,  and  would 
establish  a  competitive  right  at  all  points — applied  even  to  passage  as 
to  freight — to  the  commerce  of  the  river  connecting  by  rail  for  the  in- 
terior, by  a  classification  on  a  railroad  basis,  with  an  established  rate 
per  hundred  miles,  making  our  rivers  tributary  in  holding  in  check  the 
gigantic  concerns  that  are  now  preying  on  the  vitals  of  commerce  and 
pandering  to  speculators,  who  can  move  freight  from  the  North  to  the 
South,  East,  or  West,  and,  vice  versa,  cheaper  than  the  producer  can 
move  from  his  interior  location  to  his  nearest  market. 

Give  the  farmer  an  outlet  other  than  the  termini  of  the  line  he  lives 
on,  give  the  interior  merchant  a  choice  of  markets,  with  this  pro  rata 
tariff,  and  you  at  once  regulate  the  railroads  and  establish  good  feeling, 
preventing  litigation,  and  giving  equal  and  exact  justice  to  the  com- 
merce of  the  country,  which  originates  with  the  farmer,  and  is  supported 
by  the  patronage  of  his  family.  Justitia  fiat  ruit  cesium. 


B.  STERN'S  STATEMENT. 

Statement  of  B.  Stern,  miller,  Milwaukee,  Wis. 

The  railroad  question  should  not  be  judged  by -local  or  individual 
grievances  alone,  but  from  the  horizontal  standpoint — w.hy  and  how 
much  it  affects  the  development  of  the  country  at  large.  The  railroads 
are  the  arteries  of  our  commerce  and  industry.  If  this  essential  part 
of  our  organism  is  not  well  regulated  the  whole  country  must  be  co- 
affected.  The  bad  state  of  the  railroads  and  simultaneously  the  great 


INTERSTATE    COMMERCE.  193 

depression  of  our  whole  industry  show  this  conclusively,  and  the  ques- 
tion arises  whether  the  suffering  of  our  industry  is  caused  by  the  rail- 
roads or  the  reverse.  Investigation  will  demonstrate  the  former. 

Our  present  crisis  is  only  the  result  of  the  race  in  railroad  construc- 
tion. The  adjustment  of  the  prevailing  evils  and  the  prevention  of 
further  disastrous  effects  can  be  brought  about  only  by  the  strong  reg- 
ulating power  of  the  General  Government.  In  the  years  1879  to  1883 
40,000  miles  of  new  road  have  been  built,  of  which,  in~1882  alone,  11,596 
miles  were  constructed.  This  immense  enterprise  all  at  once  brought 
into  requisition  unusual  quantities  of  iron  and  wood.  All  the  factories 
in  these  articles  were  taxed  to  their  utmost  capacity,  and  this  induced, 
capital  to  invest  very  largely  in  these  industries.  A  large  number  of 
new  factories  sprung  up.  Labor  came  in  great  demand  all  over  the 
country.  The  building  of  the  railroads  absorbed  a  very  large  laboring 
force ;  the  iron  furnaces,  mines,  and  wood  factories  needed  more  laborers. 
This  drew  large  forces  from  other  industries,  and  the  great  demand  for 
labor  in  general  enhanced  the  scale  of  wages  considerably.  By  the  in- 
creased earnings  the  consumption  of  every  article  produced  and  manu- 
factured became  larger ;  this  stimulated  all  classes  of  industry  ;  all 
values  appreciated  and  the  country  enjoyed  its  great  boom. 

This  forced  prosperity  had  to  be  followed  naturally  by  most  serious 
reaction,  for  the  construction  of  this  great  mileage  of  new  railroads  was 
far  beyond  the  necessities  of  the  country,  was  premature  by  a  great 
many  years.  And  now  we  feel  the  sad  effects  of  an  oversupply  of  rail- 
roads and  more  productive  capacity  in  everything  than  wanted.  A  large 
number  of  the  new  railroads  acted  as  pioneers  for  the  settlement  and 
opening  for  cultivation  of  large  sections  of  land.  When  they  were  built 
they  had  to  be  operated  at  a  large  expense  with  an  entirely  inadequate 
population  and  traffic.  Many  of  the  new  railroads  were  merely  parallel 
lines  to  older  ones,  and  as  there  was  only  a  fixed  amount  of  traffic  ac- 
cording to  the  wants  of  the  respective  sections,  the  new  lines  had  nec- 
essarily to  draw  away  part  of  the  business  from  the  older  lines,  and  a 
fierce  competition  in  rates  followed.  The  carrying  of  the  same  amount 
of  freight  and  passengers  had  to  be  done  at  multiplied  expense  and  less 
rate. 

We  then  hear  at  once  this  most  unjust  term  of  "  competing "  and 
"  non-competing  "  points  proclaimed  by  the  railroads.  A  point  depend- 
ent on  only  one  line  was  a  non-competing  point,  and  had  to  pay  much 
higher  rates  than  the  more  favored  neighbor  ten  miles  off,  which  was 
blessed  with  two  or  more  lines.  The  more  lines  the  more  chances  to  get  a 
lower  rate,  the  more  facilities  to  draw  trade,  industry,  and  population 
from  its  less  favored  neighbor.  And  if  a  city  had  once  secured  the  position 
of  a  railroad  center,  all  the  railroads  were  ready  to  bestow  favored  rates 
on  it — make  it  a  leadingcenter  to  the  disadvantage  of  the  less  important 
ones.  But  this  reacted  again  unfavorably  on  the  railroads  themselves, 
because  they  weakened  the  resources  of  their  own  territory  where  they 
had  to  meet  less  competing  lines  and  had  not  to  divide  the  traffic. 

THE  LONG  AND  SHOUT  HAUL,  THEORY. 

The  next  move  fior  an  excuse  for  a  lower  rate,  and  to  draw  thereby 
more  traffic,  was  the  theory  of  longer  and  shorter  haul.  The  longer 
haul  is  less  expensive,  and  therefore  a  railroad  is  entitled  to  the  privi- 
lege granted,  for  instance,  by  the  State  of  Wisconsin,  of  having  its 
trains  running  through  the  whole  length  of  the  State  haul  freight  from 
Dakota  to  Illinois  at  comparatively  much  lower  rates  than  from  Wis- 
16232  AP 13 


194  INTERSTATE    COMMERCE. 

consin  to  Illinois.  But  this  theory  of  longer  haul  is  only  put  into  prac- 
tice where  local  pressure  by  large  establishments  is  effected,  because 
facts  show  that  the  long-haul  theory  is  not  always  carried  out.  A  ton 
of  coal  is  carried  from  the  Hocking  Valley  coal-field  to  Chicago  at  about 
$1  per  ton,  all  rail,  but  from  Chicago  to  Watertown,  Dak.,  the  freight 
is  about  $4  per  ton,  making  the  cost  of  a  poor  quality  of  coal  for  domes- 
tic purposes  to  the  farmer  in  Dakota  from  $7  to  $8  per  ton,  which  is 
worth  in  Chicago  $3  to  $3.25.  The  long-haul  theory  was  not  car- 
ried out,  because  there  was  not  enough  competing  lines,  and  some  of  the 
farmers  had  to  sell  half  of  their  large  crop  last  fall  season  to  meet  alone 
the  cost  of  fuel  for  the  year. 

Another  instance  of  inconsistency  in  the  long  haul  theory :  A  barrel 
of  flour  is  now  shipped  from  Milwaukee  to  Liverpool,  England,  a  dis- 
tance of  4,000  miles,  at  38  cents  freight ;  from  Milwaukee  to  New  York, 
a  distance  of  1,000  miles,  at  25  cents  and  less.  But  a  barrel  of  flour 
shipped  to  Montgomery,  Ala.,  a  distance  of  1,200  miles,  costs  81 
cents  per  barrel,  or  more  than  twice  as  much  as  to  Liverpool.  The 
same  is  true  as  to  meats  and  other  articles  not  raised  there.  Mont- 
gomery is  so  unfortunate  as  not  to  be  a  central  railroad  point,  but 
even  worse  than  that,  is  not  a  competing  point ;  therefore  the  long-haul 
theory  is  not  applied.  Therefore  the  cost  of  living  in  Montgomery  is 
made  so  high  that  its  enterprising  citizens  cannot  induce  laborers  to 
settle  within  their  midst  so  as  to  enable  the  erection  of  cotton  factories, 
but  the  cotton  producers  are  compelled  to  sell  their  product  at  a  price 
which  is  offered  to  them  in  New  England,  minus  freight,  and  to  buy 
the  manufactured  goods  (from  cotton)  in  New  England,  with  a  profit 
added  for  a  cotton  broker,  wholesale  jobber  in  New  York,  and  high  rate 
of  return  freight  for  the  manufactured  article. 

Is  it  possible  for  that  section  of  our  country  to  draw  population  and 
have  equal  chances  for  development  with  other  more  favored  sections, 
and  is  there  any  good  reason  in  the  light  of  justice  or  political  economy 
why  our  fellow  citizens  in  Alabama  should  not  have  the  same  oppor- 
tunities of  attaining  prosperity  as  the  citizens  of  New  York  or  Illinois  ? 
Is  it  prudent  to  furnish  flour  and  meat  at  a  less  price  to  Liverpool  than 
to  Montgomery,  and  thereby  enable  England  by  cheaper  labor  to  beat 
us  in  the  competition  for  the  world's  supply  with  cotton  fabrics  whilst 
we  are  the  producers  of  the  cotton  ourselves  ?  This  disadvantage  of 
the  Southern  States  in  their  price  of  the  necessaries  of  life  by  high 
rates  of  freight  will,  to  a  great  extent,  account  for  the  want  of  activity 
in  that  section  which  stands  in  such  sharp  contrast  to  the  busy  life  of 
the  North. 

CONCESSIONS  TO  LAKGE   SHIPPERS. 

The  next  great  idea  of  the  railroads  to  create  artificial  traffic,  or 
rather  to  rob  from  each  other  a  large  portion,  is  that  the  large  shipper 
is  entitled  to  drawbacks  against  the  smaller  one.  Nothing  could  be  de- 
vised which  can  more  disturb  commerce  than  this.  A  miller  in  Minne- 
apolis offers  to  a  railroad  line  to  ship  500  cars  of  flour  and  feed  to  Bos- 
ton at  a  reduction  of  10  cents  per  100  pounds  from  the  ordinary  rate. 
The  agent  of  the  railroad  is  very  happy  to  get  this  shipment,  accepts 
with  thanks  and  telegraphs  to  the  manager  of  the  road  that  he  suc- 
ceeded in  securing  this  big  shipment  from  the  grasp  of  a  competing 
road. 

Let  us  see  the  consequences.  Other  millers  in  Minneapolis,  Minn., 
or  Milwaukee  have  not  such  large  shipments  to  offer,  and  therefore  can- 
not secure  the  drawback.  The  consignee  in  Boston  of  the  500-car  lot 


INTERSTATE   COMMERCE.  195 

is  informed  of  this  advantage  in  freight  over  others,  and  he  directly 
offers  the  flour  at  20  cents  per  barrel  and  the  feed  at  6-  per  ton  less 
than  the  ruling  price.  Other  millers  cannot  compete,  as  they  have  not 
the  lower  rate  of  freight.  Their  Boston  correspondents  complain,  iind 
that  they  lose  trade,  and  finally  all  the  dealers  in  flour  and  feed,  jobbers 
and  retailers,  in  Boston  and  vicinity,  have  to  meet  the  situation,  pocket 
their  loss  on  all  their  stock  on  hand  and  sell  at  the  reduced  price  rather 
than  lose  the  trade.  The  result,  therefore,  is  that  a  large  amount  of 
property,  many  fold  the  amount  of  the  500  cars  shipped,  has  been  arti- 
ficially depreciated  and  other  great  injury  done  to  the  business  of  many 
dealers  and  manufacturers,  because  the  railroad  followed  the  .sublime 
principle  that  the  large  shipper  is  entitled  to  lower  rates  or  a  drawback 
against  the  smaller  one.  But,  like  every  wrong,  also  this  one,  if  upheld 
for  a  length  of  time,  would  finally  react  to  the  injury  of  the  railroads 
themselves,  because  they  would  subject  themselves  to  the  dictates  of 
the  large  shippers.  But  the  country  at  large  would  suffer  the  most, 
because  an  oligarchy  of  capitalists  would  be  created  which  could  mo- 
nopolize all  industries,  as  we  see  it  in  fact  at  present  with  some. 

All  these  iniquities  are  simply  devices  on  the  part  of  the  railroads  to 
draw  the  lion's  share  from  each  other  because  there  is  not  sufficient 
traffic  for  all  of  them.  Whole  books  could  be  written  about  the  sad 
consequences  of  the  anarchy  in  the  railroad  traffic,  which  is  only  the 
natural  outcome  of  the  injudicious  race  in  railroad  construction.  The 
defects  in  the  system  of  railroad  charges  are  too  plain,  their  injury  to 
the  railroads  and  to  the  people  too  palpable,  that  correction  of  the  evil, 
if  possible,  should  be  delayed  any  longer.  The  General  Government 
alone,  through  the  aid  of  wise  legislation,  is  the  proper  agency  to  clear 
the  chaos  of  conflicting  interests;  but  it  is  only  possible  to  do  this  by 
adhering  rigidly  to  one  great  principle — justice  to  the  railroads  and  to 
every  part  of  the  country  ;  no  competing  points,  no  distinction  between 
long  and  short  hauls,  no  drawbacks  to  the  large  shippers,  and  a  uniform 
scale  of  rates  all  over  the  country. 

A  PLAN  FOE  REGULATION  SUGGESTED. 

The  following  sketch  of  a  plan  is  submitted  without  any  claim  of  its 
practicability,  but  may  serve  to  lead  to  other  more  practicable  plans : 

(1)  A  department  for  railroads  should  be  created  at  Washington,  with  snbcoin- 
missious  iu  each  State  and  Territory.     Thet>e   BaboommiwiODfl  should  receive  all 
complaints  from  railroads  and  individuals  and  decide  them  in  accordance  with  the 
regulations  issued   l>y  the  department  for  railroads,  final  recourse  to  be  found  by 
appeal  to  the  department. 

(2)  The  railroad  department  at  Washington  shall  fix  all  rates  for  freight  and  pas- 
sengers.    The  railroads  shall  file,  under  oath,  a  statement  of  their  mileage  and  issues 
of  stock  and  bonds,  and  semi-aunually  a  statement  of  their  tonnage  carried,  with 
full  specifications  of  each  class  ot  freight,  the  earnings  therefrom,  and  expenses. 

(3)  The  construction  of  new  railroads  shall  be  subject  to  the  consent  of  the  rail- 
road department,  which  shall,  before  giving  consent,  investigate  whether  the  pro- 
jected line  will  not  injure  the  interests  of  existing  lines,  and  whether  population  and 
property  warrant  the  rentability  of  the  projected  line.     The  building  of  branch  roads 
should  be  encouraged  whenever  the  locality  promises  sufficient  traffic,  so  that  every 
section  of  the  country  may  receive  the  benefit  of  railroad  facilities. 

(4)  The  rates  of  freight,  under  proper  classification,  about  as  now  established  by 
the  railroads,  and  to  be  amended  as  experience  finds  practical,  should  all  be  fixed  by 
a  uniform  scale.     The  freight-rate  sheets  of  each  mouth  during  the  last  ten  years  of 
five  of  the  largest  Trunk  roads  from  Chicago  to  New  York  and  New  York  to  Chicago 
shall  be  computed,  and  the  computed  rate  shall  be  the  standard  for  all  rates  all  over 
the  country,  in  proportion  of  the  air-line  distance  between   any  two  points  and  the 
air-line  distance  between  New  York  and  Chicago,  25  miles  air-line  distance  forming 
the  dividing  line  of  another  rate. 


196  INTERSTATE   COMMERCE. 

(5)  The  passenger  rate  all   over  the  country  shall  be  3  cents  per  mile,  air-lira 
distance,  for  first  class,  a  lower  rate  tor  second  class,  and  a  special  rate  for  immi- 
grants ;  with  a  reasonable  rebate  for  business  agents,  theaters,  &c.,  under  strict  regu- 
lations against  abuse ;  a  moderate  charge  for  sleeping-cars  to  be  allowed,  but  all 
passes  to  any  person,  legislators  not  excepted,  shall  be  rigidly  prohibited. 

(6)  The  railroad  system  of  the  country  shall  be  divided  into  Eastern,  Southern, 
Western,  and  Northwestern  sections ;  the  tonnage  of  all  lines  and  passenger  traffic  of 
each  section,  as  far  as  it  relates  to  so-called  common  points,  shall  be  pooled  and  in 
proportion  to  the  mileage  of  each  line,  distributed  at  the  end  of  six  months;  the  ac- 
counting and  allotment  of  each  line  to  be  carried  out  under  the  superintendeucy  of 
the  railroad  department,  the  decision  of  which  shall  be  final. 

(7)  The  standard  for  earnings  of  aU  the  railroads  combined  shall  be  6'  per  cent,  of 
the  invested  capital  of  all.     If,  at  the  end  of  the  first  year,  it  shall  be  found  that 
the  established  rates  do  uot  realize  the  average  percentage,  then  the  schedule  of 
freight  rates  shall  be  correspondingly  increased,  the  largest  proportionate  increase  fall- 
ing on  Class  1,  and  gradually  declining  in  proportion  to  Class  5,  which  five  classes 
shall  realize  the  necessary  increase,  based  on  the  tonnage  carried  the  preceding  year. 
It  shall  be  within  the  province  of  the  railroad  department  to  prevent  excessive  sala- 
ries being  paid  to  directors  and  officers  of  any  railroad  by  virtue  of  their  being  an 
indirect  charge  to  the  people. 

(8)  Whenever  the  earnings  of  all  the  railroads  combined  shall  be  above  6  per  cent, 
per  annum,  the  schedule  of  freight  rates  or  passenger  rates,  or  both,  according  to  the 
judgment  of  the  railroad  department,  shall  be  lowered  to  bring  the  total  within  the 
maximum  of  6  per  cent. 

(9)  The  average  percentage  of  those  railroads  which  earned  during  the  last  decade 
6  per  cent,  and  over  on  their  invested  capital  shall  be  the  basis  for  the  future  net 
earnings  of  these  railroads  for  the  next  five  years.    After  five  years  the  maximum 
percentage  of  the  earnings  of  these  railroads  shall  be  determined  by  the  railroad  de- 
partment.    For  those  railroads  which  earned  heretofore  less  than" 5  per  cent.,  this 
percentage  of  net  earnings  shall  be  the  aim  to  be  attained  under  the  benefits  of  the 
creation  of  the  railroad  department. 

(10)  If  at  the  end  of  any  year  during  the  next  five  years  the  earnings  of  any  line 
of  that  class  which  eamed  previously  6  per  cent,  shows  a  gain  above  its  average  rate 
of  earnings  than  during  the  first  five  years  of  the  operation  of  the  railroad  department, 
half  of  the  surplus,  or  so  much  less  as  needed,  shall  be  paid  over  to  the  railroad  de- 
partment and  by  this  department  distributed  in  proportion  to  their  deficiency  and 
mileage  amongst  those  railroads  which  earned  less  than  5  per  cent. 

(11)  The  railroad  shall  be  subject  to  fines,  as  fixed  by  the  railroad  department,  in 
case  of  non-fulfillment  of  the  regulations,  and  for  this  purpose  a  guarantee  fund  shall 
be  deposited  by  the  railroads  with  the  railroad  department  equal  to  one-half  mill  per 
dollar  of  their  invested  capital,  such  guarantee  fund  to  draw  a  low  rate  of  interest ; 
and  additional  more  effective  jurisdiction  should  be  given  to  the  railroad  department 
in  case  of  repeated  acts  against  their  regulations. 

It  will  be  noticed  that  the  rates  for  passenger  traffic,  especially  for  through  travel, 
are  pretty  high,  but  it  should  be  observed  that  the  traveling  is  mostly  done  by  the 
richer  portion  of  the  people.  It  will  not  affect  the  prosperity  of  this  class  by  paying 
a  larger  fare  for  their  journeys,  but  this  increased  rate  will  assist  very  materially  to 
lighten  the  rates  for  the  necessaries  of  life  used  by  laborers  and  farmers.  The  roads 
in  the  older  sections  of  the  country  will  be  considerably  benefited  by  the  passenger 
rate  as  proposed.  But  the  roads  in  the  later-settled  sections  will  not  gain  by  the  pro- 
posed rates,  which  may  in  some  instances  even  be  lower  than  charged  heretofore. 
Aside  from  this  the  roads  in  the  far  West  and  South  will  at  first  earn  less  on  account 
of  the  proposed  reduction  of  freight  rates  against  the  ones  prevailing.  But  it  is  a 
matter  of  justice  due  to  the  population  in  these  sections  of  country  that  this  burden 
of  high  railroad  rate*  should  be  lightened,  and  thereby  the  whole  country  be  benefited. 
In  a  very  short  time  the  railroads inthese  sections  will  recover  the  momentary  loss  by 
the  greater  prosperity  of  the  inhabitants.  Greater  inducements  for  new  settlers  are 
thereby  held  out,  and  there  is  no  doubt  that  the  traffic  will  be  by  far  more  increased 
than  under  the  present  exorbitant  tax  of  the  railroad  charges.  Article  10  may  prove 
a  partial  compensation  for  the  anticipated  loss  by  the  roads  in  the  South  and  far 
West,  which  are  mostly  feeders  to  the  older  roads.  It  cannot  be  presumed  that  a 
plan  as  sketched  will  be  perfect.  Experience,  however,  will  soon  show  the  defects 
and  how  they  ought  to  be  remedied,  but  by  the  proposed  uniformity  and  stability  of 
rates,  by  regulating -the  construction  of  new  roads,  a  more  steady  character  of  our 
industry  and  commerce  will  be  obtained.  The  railroads  will  be  protected  against 
each  other,  can  thereby  do  their  business  at  less  expense,  and  will  be  generally  pros- 
perous. There  is  even  no  doubt  that  all  the  indebtedness  of  the  roads  in  the  form  of 
stocks  and  bonds  will  be  eagerly  sought  for  as  an  investment  and  their  market  value 
enhanced,  Capital  will  readily  be  found  for  new  roads,  because  the  supervision  of 
the  roads  by  the  Government  under  regulating  laws  amount  almost  to  a  guarantee 


INTERSTATE    COMMERCE.  197 

of  a  fixed  revenue.  We  will  not  have  any  more  booms  nor  excessive  depression,  will 
not  create  so  many  millionaires,  but  will  have  by  far  less  pauperism,  discontent,  and 
strikes,  build  up  a  greater  number  of  cities  and  wealthy  towns,  and  secure  a  larger 
degree  of  general  prosperity  commensurate  to  the  immense  resources  of  this  country. 
We  will  enjoy  the  best  and  cheapest  railway  system,  without  any  burden  to  the 
Government  by  ownership  or  the  management  of  its  details,  as  in  other  countries. 


F.  C.  WILSON'S  STATEMENT. 

Statement  of  F.  C.  Wilson,  239  and  241  Lake  street,  Chicago,  manufacturer 

of  oil-tanks  and  cans. 

THE   CLASSIFICATION   OF  FREIGHT. 

The  greatest  evil  of  the  freight  question  appears  to  be  in  the  matter 
of  classification,  which  appears  at  present  to  be  purely  arbitrary  and 
based  more  upon  "  what  the  goods  will  stand"  than  upon  the  cost  of 
the  service.  It  costs  no  more  to  haul  a  ton  of  gold  than  the  same 
weight  of  coal.  The  extra  expense  is  incurred  in  its  care  or  insurance. 
So  far  as  weight  and  space  are  concerned,  iron  and  silver  are  about 
equal.  The  actual  cost  of  transporting  by  rail  is  susceptible  of  demon- 
stration to  a  nicety.  The  car-load  should  be  the  lowest  rate,  as  it  costs 
no  more  to  haul  fifty  cars  for  fifty  different  persons  than  fifty  cars  for 
one  corporation.  Any  goods  that  are  of  such  bulk  as  to  load  a  car  to 
the  minimum  weight  should  be  hauled  at  the  same  rate  for  distance, 
the  value  to  be  inserted  in  the  bill  of  lading,  and  such  additional  charge 
made  for  insurance  as  will  cover  the  risk. 

It  is  impossible  to  make  an  arbitrary  classification  that  will  cover  the 
thousands  of  forms  that  merchandise  is  put  into.  Some  time  since  we 
had  a  quantity  of  wire  shipped  from  Cleveland  to  Chicago,  rate,  15  cents 
per  hundred.  We  desired  to  ship  it  to  Riverside,  12  miles  out  on  the 
Chicago,  Burlington  and  Quincy  Railroad.  The  rate  was  about  25  cents 
per  hundred.  It  was  worked  into  different  shape,  and  desiring  to  re- 
ship  it  to  Chicago,  the  rate  was  three  times  first  class,  I  think  75  cents 
per  hundred,  amounting  to  about  $7.50  to  return  it.  A  team  was  hired 
which  laid  the  lot  down  at  our  factory  for  $2. 

A  system  which  permits  such  things  is  not  worthy  of  the  name.  A 
general  system  could  be  devised  for  quantities  less  than  car-loads,  based 
upon  distance,  weight,  bulk,  and  value,  (the  latter  to  be  determined  by 
the  shipper,  who  could  recover  no  more  from  the  railway  company),  that 
could  be  applied  to  all  classes  of  goods  and  give  satisfaction  to  all 
merchants  who  are  willing  to  compete  upon  even  terms.  I  do  not  say 
that  such  a  system  is  practicable  in  view  of  the  condition  of  things  at 
the  present  time,  but  it  would  be  just,  and  eventually  the  people  will 
have  it. 


B.  F.  SMITH'S  STATEMENT. 
Statement  by  B.  F.  Smith,  126  Washington  Street,  Chicago. 

I  avail  myself  of  this  opportunity  to  express  my  own  views,  after  an 
active  experience  of  twenty  years  in  the  freight  department  connected 
with  the  New  York  Central  and  Hudson  River  Road,  and  its  numerous 


198  INTERSTATE   COMMERCE. 

connections.  I  assume  your  committee  will  confine  its  investigation 
exclusively  to  the  policy  pursued  and  to  be  pursued  by  railroads  forming 
connecting  lines  for  transportation  of  freight  and  passengers  to  and 
from  one  State  to  another,  and  through  different  States  over  which  Con- 
gress only  can  exercise  jurisdiction,  the  object  of  which  legislation  is  to 
protect  the  common  interest  of  shippers  and  the  railroads,  without 
prejudice  to  either. 

To  accomplish  this  (assuming  the  railroad  companies  have  been 
granted  extraordinary  privileges  and  powers  by  virtue  of  general  laws 
and  charters  for  their  protection),  the  necessity  of  special  laws  for  the 
protection  of  individual  persons  doing  business  over  the  roads  has 
arisen,  and  to  accomplish  this,  it  is  suggested  that  a  commission  may 
be  appointed  with  certain  powers,  for  the  supervision  of  the  conflicting 
interests  that  may  arise  between  shippers  and  carriers,  appertaining  to 
rates  to  be  charged  for  the  transportation  of  freight  and  passengers  to 
and  from  all  competing  points. 

The  tendency  in  the  past  few  years  and  at  present  is  to  consolidate 
the  railroad  interests  under  the  absolute  control  of  a  few  men,  and  then 
with  pooling  their  earnings  virtually  forms  an  absolute  monopoly,  prej- 
udicial of  the  common  interests  of  the  country  and  not  easily  controlled, 
unless  taken  in  hand  in  good  time.  The  present  surplus  of  the  carry- 
ing power  of  the  roads,  and  the  limited  amount  of  tonnage  to  be  carried, 
will  not  be  continued  in  all  time  in  the  future,  and  cannot  be  depended 
upon  for  protection  to  shippers ;  hence  the  necessity  for  some  proper 
legislation  and  rules,  which  shall  operate  in  a  time  when  there  may  be 
a  surplus  of  tonnage  compared  with  the  carrying  power,  which  power, 
being  endowed  with  special  privileges  by  virtue  of  their  charter,  to  be 
kept  under  proper  lawful  control. 

They  should  not  be  allowed  to  pool  earnings,  but  open  to  similar  com- 
petition, which  pervades  the  general  business  of  the  company.  Beason- 
able  rates  may  be  established  by  the  railroads  for  transportation  to  and 
from  common  points,  subject  to  a  revision  and  control  of  the  commis- 
sion. Ten  days'  notice  should  be  publicly  given  by  posting  in  printed 
bills  in  their  warehouses  and  offices  in  case  of  any  change  of  rates.  No 
discriminating  rates  or  rebates  should  be  given  any  shipper  not  enjoyed 
by  all  on  the  same  class  of  freight.  Car-loads  may  be  rated  at  10  tons, 
as  a  basis  of  car-load  rates,  in  comparison  with  mixed  freights  of  dif- 
ferent classes  for  different  consignees.  A  uniform  rate  per  ton  per  mile, 
which  may  be  made  on  different  class  freights,  should  be  made  to  small 
and  large  shippers  alike  when  in  car-loads  or  in  quantity  less  than  full 
car-loads.  The  rates  on  light  and  bulky  goods  may  be  made  on  a  basis 
of  10  tons  in  a  car,  which  shall  pay  an  amount  equal  to  10  tons  in  a  car. 
All  freight  offered  for  shipments  should  be  loaded  in  its  regular  turn,  for 
which  bills  of  lading  should  be  given  to  the  shipper  designating  the  route 
and  rate  charged  to  destination.  A  terminal  charge  may  beallowed  of  20 
cents  a  ton,  at  place  of  shipment  and  delivery,  which  shall  be  embraced 
in  the  regular  rate,  and  added  to  it  when  published.  The  rates  made 
for  a  short  distance  in  excess  of  longer  distances,  may  be  made  under 
the  control  and,  discretion  of  the  commissioners,  but  not  otherwise.  All 
differences  which  may  arise  between  shippers  and  carriers  shall  be  sub- 
mitted to  the  commissioners,  whose  judgment  shall  be  final  and  bind- 
ing. All  railroads  should  be  required  to  make  their  annual  report  and 
send  to  the  commissioners. 


INTERSTATE    COMMERCE.  199 


A  PLEA  FOR  THE  REGULATION  OF  FREIGHT  RATES  BE- 
TWEEN THE  UPPER  MISSISSIPPI  STATES  AND  LAKE 
MICHIGAN. 

Statement  received  by  the  committee  from  the  Michigan  and  Mississippi 

canal  commission. 

It  has  been  announced  that  "the  regulation  of  the  transportation  of 
freights  and  passengers  between  the  several  States  by  railroads  and 
by  water  routes  in  connection  or  in  competition  with  said  railroads" 
constitutes  the  object  of  your  inquiry.  Therefore,  in  the  interest  of  a 
large  number  of  the  producers,  dealers,  and  shippers  of  the  Upper  Mis- 
sissippi Valley,  your  attention  is  earnestly  solicited  to  a  system  of  prac- 
ticable and  effectual  "  regulation  "  in  that  regard,  which,  it  is  believed, 
may  be  readily  applied  and  enforced  at  comparatively  small  cost,  if 
Congress  in  its  wisdom  will  but  so  determine. 

The  "regulation"  thus  referred  to  is  desired  to  be  enforced  as  to  the 
commerce  between  the  Upper  Mississippi  States  and  Lake  Michigan,  as 
integral  to  the  commerce  between  those  States  and  the  cities  and  sea- 
ports of  the  Eastern  Atlantic  coast.  This  desire  has  emphasis  and  con- 
stantly increasing  urgency  in  the  fact  that  inevitably,  it  would  seem, 
the  trend  of  the  commerce  of  the  States  indicated  is  eastward,  and  that, 
too,  so  largely  as  to  render  a  lessened  freight  charge  on  that  commerce 
a  matter  of  prime  importance. 

Already  this  desired  regulation  has  full  force  as  to  a  great  part  of  the 
extended  line  (five-sixths  thereof)  which  must  be  traversed  by  the  trans- 
Upper  Mississippi  and  Eastern  Atlantic  traffic.  This  it  has  by  means 
of  the  tree  all  water  competition  with  the  railroads  secured  through  the 
Great  Lakes,  the  Erie  Canal,  and  the  Hudson.  That  route  has,  for  the 
Northwest,  its  initial  points  and  termini  at  Chicago  and  other  of  the  ports 
on  the  west  shore  of  Lake  Michigan.  Practically  it  has  its  beginnig  and 
ending  at  Chicago,  so  far  as  the  commerce  of  the  Upper  Mississippi  States 
can  have  concern  therewith.  There  the  potential  power  of  its  "regu- 
lation "  is  asserted  or  ceases  to  have  further  influence.  At  that  point  the 
cereals,  the  meats,  and  the  dairy  products  of  the  great  valley  embrac- 
ing the  States  in  question  are  ever  assured  cheap  freightage  as  they 
seek  their  Eastern  State  consumers  or  are  sped  on  their  way  to  a  foreign 
market.  To  reach  that  point  onerous  or  even  oppressive  freight  charges 
may  have  been  submitted  to.  Once  there  all  such  compulsion  instantly 
ceases  its  pressure.  Water  route  competition  there  issues  its  resistless 
fiat  of  regulation.  From  obedience  to  the  decrees  of  that  power  there  is 
no  escape.  Of  course,  too,  and  inevitably,  that  same  ever  operative 
regulation  is  equally  effective  as  to  all  west-bound  traffic  from  the 
East.  The  machinery,  the  agricultural  implements,  the  varied  manu- 
factures, the  heavy  groceries,  the  oils,  salt,  anthracite  coal,  &c.,  the  cost 
of  which  to  the  consumers  in  the  Northwest  is  so  largely  affected  by  the 
rates  of  transportation  laid  upon  their  bulk  and  weight,  are  vastly 
cheapened  to  their  final  purchasers  by  the  beneficent  regulation  which 
the  great  competitive  water  route  so  surely  enforces.  Along  every 
mile  of  the  distance  separating  the  waters  of  New  York  Harbor  and  the 
westernmost  waves  of  Lake  Michigan  a  controlling  power  far  superior  to 
that  of  any  possible  edict  of  legislation  is  thus  exercised. 

The  people  of  the  Upper  Mississippi  Valley  appreciate  fully  the  force 
and  the  value  of  the  regulation  made  so  effective.  Because  they  are  so 
intelligently  appreciative  they  are  not  content  that  the  beneficence  of 


200  INTERSTATE   COMMERCE. 

that  power  shall  have  force  as  to  their  east-bound  products  only  whei* 
Chicago  is  reached,  and  cease  all  its  influence  on  the  instant  that  city 
is  touched,  so  far  as  concerns  the  merchandise  from  the  East  of  which 
they  are  to  be  the  purchasers  and  consumers.  They  therefore  ask  that 
the  initial  point  and  terminus  of  that  benignant  and  enriching  influ- 
ence shall  no  longer  be  found  only  at  the  west  shore  of  Lake  Michigan. 
They  urge  that  instead  it  be  removed  farther  west,  that  it  be  made  to 
reach  and  gladden  their  own  fertile  valley. 

To  effect  that  removal,  to  extend  to  the  Upper  Mississippi  the  ad- 
vantages of  competition,  and  therefore  of  regulation  now  denied,  as  far  a» 
relates  to  transportation  to  and  from  the  East,  is  the  object  sought  in 
the  construction  of  the  so-called  Hennepin  Canal,  and  in  the  enlarge- 
ment of  the  Illinois  and  Michigan  Canal.  Each  one  of  these  desired 
works  of  internal  improvement  would  be,  indeed,  the  complement  of 
the  other.  The  former  would  be,  in  fact,  but  an  extension  of  the  latter. 
The  Illinois  and  Michigan  Canal,  with  its  connection  with  the  slack- 
water  navigation  of  the  Illinois  River,  has  already  shortened  the  sepa- 
ration of  the  Mississippi  from  Lake  Michigan  to  the  extent  of  two-thirds 
of  the  entire  length  thereof.  To  remove  the  remaining  one-third  of  the 
obstacle  to  a  completed  connecting  water  route  between  the  great  river 
and  the  great  lake  will  be  to  secure  to  the  Northwest  the  finished  Mich- 
igan and  Mississippi  Canal.  The  value  of  such  a  completed  connec- 
tion between  the  two  great  systems  of  water-route  transportation  which 
enrich  the  interior  of  our  country — the  east  and  west  system  of  the 
lakes  and  the  Erie  Canal  and  the  north  and  south  system  of  the  Missis- 
sippi and  its  tributaries — would  be  incalculable.  But  that  value  would 
be  continuously  demonstrated  to  be  more  largely  in  its  potential  power 
of  regulation  as  to  rates  of  freight  charges  than  in  all  others  of  its 
many  advantages  to  the  East  and  to  the  West. 

The  legislatures  of  Illinois  and  of  Iowa  have  repeatedly  memorialized 
Congress  in  favor  of  the  construction,  and  the  control  afterwards,  by 
the  General  Government  of  the  yet  missing  link — the  canal  from  Hen- 
nepin to  Rock  Island — in  this  desired  chain  of  water-route  communi- 
cation. Five  times—in  1864, 1870, 1874, 1882,  and  1884,  respectively— 
has  Iowa  so  voiced  the  desires  of  its  people.  At  its  last  session  the 
general  assembly  of  New  York  also,  reaffirming  an  expression  of  opinion 
presented  to  the  country  by  its  senate  in  a  previous  year,  but  which  the 
house  had  not  then  time  to  reach  and  indorse,  emphatically  addressed 
Congress  in  the  same  behalf.  The  action  of  these  representative  bodies, 
one  of  the  East  and  the  others  of  the  West,  have  had  reiterated  ap- 
proval and  support  on  the  part  of  the  people.  Delegate  conventions, 
mass  meetings,  boards  of  trade  and  other  commercial  bodies,  municipal 
councils,  the  press,  and  petitions  of  manufacturers,  shippers,  farmers,  and 
citizens  generally,  in  New  York,  Massachusetts,  Connecticut,  Pennsyl- 
vania, Ohio,  Indiana,  Michigan,  Wisconsin,  Minnesota,  Missouri,  Ne- 
braska, Kansas,  Iowa,  and  Illinois,  have  similarly  spoken  in  earnest  ap- 
peals to  the  legislative  power  of  the  nation.  To  recall  to  your  committee 
in  detail  these  several  repeated  and  earnest  solicitations  for  that  relief 
to  the  commerce  of  the  country  which  the  General  Government  can 
alone  secure  would  trespass  upon  your  patience  and  greatly  transcend 
the  proper  limitations  of  this  argument.  But  the  fact  of  these  con- 
current and  repeated  prayers  from  suppliants  whose  widely-separated 
locations  do  but  the  more  strongly  attest  the  importance  of  the  interests 
they  concurrently  represent  is  one  which  cannot  be  too  earnestly  pressed 
upon  your  attention.  That  fact  certainly  merits  the  most  considerate 
thought  of  Congress,  for  it  may  with  confidence  be  affirmed  that  the 


INTERSTATE   COMMERCE.  201 

entire  history  of  popular  discussion  and  of  national  legislative  action 
has  not  furnished  its  parallel.  The  unanimity,  earnestness,  and  extent 
of  the  popular  demand  for  the  construction  of  the  Hennepin  Canal  as 
an  inseparable  part  of  a  completed  Michigan  and  Mississippi  Canal,  by 
means  of  which  may  be  secured  a  just  regulation  of  freight  charges  to 
the  people  of  the  Upper  Mississippi  Valley,  stands  unique.  No  other 
work  of  internal  improvement  has  ever  enlisted  anything  like  the  ag- 
gregated support  of  the  people,  East  and  West.  Indeed,  it  is  difficult, 
in  view  of  the  abounding  evidences  of  that  widespread  popular  sup- 
port, to  deny  force  to  that  suggestion  which  attributes  the  delay  of 
Congress  to  comply  with  the  demand  for  the  completion  of  that  work 
to  influences  which  are  opposed  to  any  such  just  and  ever-operative 
regulation  as  a  water  route  connection  between  the  Upper  Mississippi 
and  Lake  Michigan  will  inevitably  enforce.  To  permit  so  certain  and 
so  potential  a  "  regulation  "  is  not  within  the  plans  and  the  purposes  of 
combinations  interested  in  the  maintenance  of  high  rates  of  freight 
charges.  Nevertheless  when  Congress  shall  reach  an  intelligent  appre- 
hension of  the  actual  facts  of  the  situation,  the  completed  Michigan 
and  Mississippi  Canal  will  be  as  surely  decreed  and  as  carefully  main- 
tained, free  to  the  people  at  the  expense  of  the  whole  people,  at  the 
expense  of  the  nation,  as  is  to-day  the  canal  around  the  Des  Moines 
Eapids,  or  that  of  the  Saul  Ste.  Mary.  Canals  to  overcome  natural  ob- 
stacles by  which  would  else  be  permanently  separated  important  natural 
water  courses  have  time  and  again  been  constructed  by  the  National 
Government.  An  obstacle  scarcely  more  expensive  to  overcome  than 
that  which  long  separated,  for  the  uses  of  transportation,  the  Missis- 
sippi at  Montrose  from  the  Mississippi  at  Keokuk  alone  now  separates 
the  Mississippi  at  Eock  Island  from  the  waters  which  at  Heimepin  flow 
from  Lake  Michigan.  A  few  hundred  thousand  dollars  more,  at  most, 
will  suffice  to  cut  through  and  so  practically  remove  the  latter  than  has 
actually  been  expended  in  making  and  keeping  in  order  a  navigable 
way  around  the  former.  Official  figures  accessible  at  the  War  Depart- 
ment to  all  inquirers  evidence  this  fact  beyond  dispute.  So,  also,  the 
more  recently  authorized  expenditures  by  Congress  for  the  Ohio  Canal 
at  Louisville  and  Portland  and  for  the  Muscle  Shoals  Canal  on  the  Ten- 
nessee River  multiply  precedent  and  enforce  argument  in  behalf  of  the 
canal,  the  construction  of  which,  in  the  interests  of  the  people  of  the 
Upper  Mississippi  Valley  and  of  the  East,  still  awaits  the  action  of 
Congress. 

The  almost  marvelous  effects  and  the  vastly  enriching  results  to  com- 
merce and  industry  attendant  upon  a  just  aid  from  Congress  in  the  re- 
moval of  obstructions  to  the  due  connection  of  great  water  routes  have 
been  also  forcibly  illustrated  in  the  case  of  the  Saint  Clair  Flats.  These 
originally  and  long  prevented  a  freely  navigable  communication  between 
Lakes  Huron  and  Erie-  They  lay  within  the  jurisdiction  of  Michigan. 
That  State  could  not  incur  the  expense  necessary  to  the  removal  of  the 
impediments  to  navigation  they  presented.  It  would  have  been  as  un- 
just as  it  was  vain  to  expect  so  great  a  work  to  be  attempted  by  one 
State  for  the  benefit,  at  least  equally  with  itself,  of  several  other  States  j 
precisely  as  it  would  be  neither  wise  nor  in  accord  with  justice  to  ask 
that  the  Michigan  and  Mississippi  Canal  shall  be  constructed  by  the 
State  of  Illinois.  Moreover,  a  work  so  certainly  beneficial  to  several 
States  could  not  properly,  even  if  once  completed,  be  left  to  the  control 
of  any  one  State,  with  a  constant  liability  to  toll  exactions,  &c.,  certain 
to  be  burdensome  to  commerce.  So  Congress  decided  as  to  the  Saint 
Clair  Flats.  So  Congress  must  decide  also  as  to  the  entire  canal  route 


202  INTERSTATE    COMMERCE. 

from  Chicago  to  Rock  Island.  It  must  decree  that  the  General  Govern- 
ment accept  the  gift  of  the  Illinois  and  Michigan  Canal  offered  by  the 
State  cf  Illinois,  and  that  it  also  enlarge  that  canal  and  complete  its 
extension  by  the  construction  of  the  Henuepin  Caual,  so-called.  It 
will  do  so  in  the  interest  of  the  people,  to  secure  for  them  a  more  ex- 
tended application  of  the  most  effective  regulation  of  freight  tariffs 
known  or  possible. 

The  millions  of  dollars  expended  upon  the  Saint  Clair  Flats  under 
the  authority  of  Congress  have  secured  a  continuous  saving  of  millions 
of  dollars  to  the  people,  East  and  West,  annually.  The  completion  of 
that  great  work  really  revolutionized  grain  transportation  on  the  lakes. 
It  enabled  the  passage  from  Chicago  to  Buffalo  of  steam-propelled  ves- 
sels capable  not  only  of  carrying  cargoes  of  grain  three  times  as  large 
as  those  before  possible,  but  also  of  towing,  at  the  same  time,  yet  other 
vessels  similarly  laden.  A  single  steamboat  has  thus  conveyed  and 
towed  260,000  bushels  of  wheat  at  a  single  passage,  whereas  a  move- 
ment of  25,000  bushels  by  a  single  steamer  or  sailing  vessel  had  before 
been  a  notable  and  rare  accomplishment.  The  broader  channel  and 
deeper  water  have  secured  these  results,  and  these  have  permanently 
reduced  the  cost  of  grain  freightage  from  Chicago  to  Buffalo  to  the  ex- 
tent of  6  cents  per  bushel.  In  the  same  ratio  and  of  necessity,  the  rail- 
roads running  eastward  from  Chicago  have  ever  since  the  completion 
of  the  improvement  at  the  Saint  Clair  Flats  also  reduced  their  freight 
rates.  Noting  these  facts,  and  that  of  the  abolition  of  tolls  on  the  Erie 
Canal,  Gov.  William  Bross,  of  Chicago,  stated  last  January,  in  an  ad- 
dress to  members  of  Congress,  that — 

The  all-water  transit  between  Chicago  and  New  York,  instead  of  being  17  and  20 
and  even  25  cents,  as  a  few  years  ago,  now  rules  at  about  six  cents ;  sometimes  a  frac- 
tion above  and  occasionally  a  small  fraction  below  that  figure.  In  summer  the  all-rail 
freights  per  bushel  are  generally  a  fraction  above  those  of  water,  depending  upon 
competition  and  the  demand  for  export ;  but  in  winter  the  rates  range  from  12  to  21 
cents  per  bushel.  No  comment  is  needed. 

The  same  excellent  authority,  in  the  same  address,  also  presented  the 
following  facts,  as  by  him  ascertained  on  careful  inquiry  and  investiga- 
tion : 

Coal  was  carried  at  an  average  charge  for  the  season  ("the  season  of  1884)  from  Erie 
and  Buffalo  to  Chicago,  about  1,000  miles,  for  64  cents  per  ton ;  thence  to  the  Missis- 
sippi River,  200  miles,  the  charge  was  $2.00  ;  for  the  next  100  miles  it  mounts  up  to 
$4.00  per  ton  from  Chicago,  and  in  Western  Iowa  it  runs  upward  to  a  much  higher 
figure.  *  *  *  Take  another  example :  The  freight  on  a  bushel  of  wheat  between 
Northern  Iowa  and  Chicago,  some  400  miles,  is  and  has  been  for  the  season  10.8  to  16.8. 
From  points  in  Nebraska  and  Southern  Minnesota,  16.8  to  21  cents ;  the  highest  figure 
being  more  than  the  cost  of  transporting  a  bushel  of  wheat  in  June  last  from  Chicago 
to  Liverpool,  about  4,000  miles — showing,  at  least,  4, 000  miles  for  the  same  price  in 
favor  of  water  transit.  So  oppressive  have  been  the  enormous  freight  charges  for 
some  time  past  that  wheat  was  sold  west  of  the  Missouri  River  for  30  cents  per  bushel, 
and  corn  for  12,  making  its  value  by  the  ton  less  than  that  of  coal,  so  that  producers 
have  actually  burned  it  for  fuel.  It  is,  therefore,  plain  that  if  Congress  does  not  want 
the  vast  fertile  West — the  Upper  Mississippi  Valley — to  go  back  to  its  primitive  des- 
olation, they  must  provide  cheap  water  transit  for  its  cereal  and  other  products. 

The  regulating  power  of  water-route  competition  and  the  advantages 
certain  to  accrue  to  the  people  at  large,  were  the  canal  from  Chicago 
enlarged  and  extended  to  the  Mississippi,  are  well  illustrated  in  the 
facts  stated  in  the  report  of  the  survey  of  that  canal  route  made  by 
Maj.  W.  H.  H.  Benyaurd,  U.  S.  A.,  to  the  Secretary  of  War,  as  follows: 

Actual  results  are  shown  already,  it  may  be  further  urged,  as  due  to  the  direct 
competition  of  canal  and  railroad,  in  the  case  of  the  Illinois  and  Michigan  Caual  and 
the  railroads  by  which  it  is  paralleled.  The  railroad  commissioners,  of  Illinois  estab- 


INTERSTATE    COMMERCE.  203 

listed  the  freight  charge  on  wheat  by  rail  last  season  at  11  cents  per  100  pounds,  or 
6.6  cents  per  bushel,  for  100  miles,  the  distance  from  La  Salle  to  Chicago  ;  for  130 
miles,  the  distance  from  Henry,  on  the  Illinois  River,  to  Chicago,  12  cents  per  100 
pounds,  or  7.2  cents  per  bushel ;  for  182  miles,  the  distance  from  Rock  Island  to  Chi- 
cago, 13.4  cents  per  100  pounds,  or  8.2  cents  per  bushel.  It  has  been  freely  stated 
and  generally  believed  that  the  railroads  have  regarded  these  rates  of  the  commis- 
sioners as  TOO  low.  Yet  wheat  was  last  season  taken  from  Henry  and  from  Peoria, 
each  on  the  Illinois  River,  for  3  cents  per  bushel  by  rail,  while  the  schedule  rates  were 
7.2  cents  per  bushel.  Thus  were  the  rates  of  the  railroad  compelled  to  fall  to  a  point 
of  equality  with  those  of  the  canal ;  while  on  lines  not  so  placed  in  competition  with 
that  water  route,  the  rates  from  shipping  stations  of  equal  distance  from  Chicago 
with  those  of  Peoria,  Henry,  and  La  Salle  were  required  to  pay  the  full  schedule 
rate  as  established  by  the  commissioners. 

******* 

The  reports  of  the  leading  trunk  lines,  collated  by  Mr.  Joseph  Nimmo,  jr.,  in  a  table 
illustrating  the  successive  reduction  of  freight  charges  on  those  roads  and  on  the  Erie 
Canal,  respectively,  furnish  striking  evidence  on  this  point.  (Internal  Commerce  of 
the  United  States  for  1880,  appendix,  page  230.) 

Of  twelve  of  the  railroads  therein  enumerated,  maintaining  an  average  freight 
charge  of  from  1.85  to  3.168  cents  per  ton  per  mile,  respectively,  in  1868,  the  only 
ones  maintaining  for  the  year  1880  an  average  freight  charge  of  .88  of  a  cent  per  ton 
per  mile  were  those  having  no  water-route  competition.  This  is  a  summary  of  that 
exhibit  as  to  the  charges  for  1880  per  ton  per  mile  : 

RAILROADS   HAVING   COMPETITION   IX   WATER  ROUTES. 

Per  ton  per  mile. 

New  York  Central  Railroad $0  00. 88 

Pennsylvania  Railroad 00.88 

New  York,  Erie,  and  Western  Railroad 00. 84 

Philadelphia  and  Erie  Railroad 00. 56 

Lake  Shore  and  Michigan  Southern  Railroad 00.75 

Michigan  Central  Railroad 00.842 

Pittsburgh  and  Fort  Wayne  Railroad  (for  1879 ;  for  1880  not  given) 00. 76 

RAILROADS   NOT   COMPELLED   TO   MEET   WATER-ROUTE   COMPETITION. 

Per  ton  per  mile. 

Boston  and  Albany  Railroad $0  01.20 

Chicago,  Burlington,  and  Quincy  Railroad  (for  1879;  for  1880  not  given)  .        01.023 

Chicago  and  Northwestern  Railroad  (for  1879;  for  1880  not  given) 01.49 

Chicago,  Milwaukee  and  Saint  Paul  Railroad  (for  1879;  18bO  not  given)..         01.76 
Chicago,  Rock  Island  and  Pacific  Railroad  (for  1879;  for  1880  not  given  ..        01.21 


Erie  Canal  rate  for  1880 00.49 

Thus  it  will  be  seen  that  the  four  leading  trunk  railroads  running  to  Chicago  from 
the  Upper  Mississippi  Valley  States  maintained  an  average  of  .63  of  a  cent  per  ton 
per  mile  freight  charge  in  excess  of  the  average  freight  charge  of  seven  other  trunk 
railroads  eastward  of  Chicago,  where  tariff  rates  were,  as  Mr.  Fink*  has  explained, 

"The  words  of  Mr.  Albert  Fink,  railroad  commissioner,  here  referred  to,  were  ad- 
dressed to  Hon.  William  Windom,  chairman  of  the  Senate  Committee  on  "  Transpor- 
tation Routes  to  the  Sea-board,"  in  a  letter  to  that  gentleman  in  1878,  as  follows: 

"  You  are  aware  that  when  the  rates  are  reduced  between  Chicago  and  New  York 
on  account  ot  the  opening  of  the  canal,  this  reduction  applies  not  only  to  Chicago, 
but  to  all  interior  cities  (Saint  Louis,  Indianapolis,  Cincinnati)  to  New  York.  If  that 
•was  not  the  rule,  the  result  would  be  that  the  roads  running,  say,  from  Saint  Louis, 
Indianapolis,  and  Cincinnati,  to  Chicago  would  carry  the  freight  to  Chicago,  from 
•which  point  low  rates  would  take  it  to  the  East,  and  leave  the  direct  road  from  the 
interior  points  to  the  sea-board  without  any  business.  Hence,  whenever  the  rates  are 
reduced  on  account  of  the  opening  of  navigation  from  Chicago  and  lake  ports,  the 
same  reduction  is  made  to  all  interior  cities,  not  only  to  New  York,  where  the  canal 
runs,  but  to  Philadelphia  and  Baltimore.  Although  the  latter  cities  have  no  direct 
•water-route  communication  with  the  West,  yet  they  receive  the  bent-tit,  as  far  as 
railroad  rates  are  concerned,  the  same  as  if  a  canal  were  running  from  the  lakes  direct 
to  these  cities,  because  whenever  rates  from  Chicago  to  New  York  are  reduced  it  ia 
necessary  to  reduce  the  rates  from  Chicago  to  Boston,  Philadelphia,  and  Baltimore; 
otherwise  the  business  would  all  go  to  New  York.  The  reduction  of  the  rates  from 
Chicago  and  Saint  Louis  to  Baltimore  causes  a  reduction  in  rates  on  shipment  via 
Baltimore  to  Atlantic  ports — Norfolk,  Wilmington,  Port  Royal,  Savannah,  Brunswick, 


204  INTERSTATE    COMMERCE. 

constantly  under  the  control  of  the  potentially  operative  competition  of  the  water 
routes  of  the  lakes  and  the  Erie  Canal.  The  fact  thus  cited  to  attention  is  a  very 
important  one.  Its  existence  is  urged  as  furnishing  an  argument  for  the  opening  up 
of  an  extension  of  the  water  route  of  the  lakes  to  the  Upper  Mississippi  so  strong 
that  its  force  can  neither  be  moderated  nor  escaped.  Assessed  upon  the  entire  cereal 
products  of  the  States  from  which  that  extra  freight  charge  is  collected,  the  annual 
aggregate  would  alone  reach  the  sum  of  $3,482,687,  if  only  the  crop  yield  of  the 
principal  cereals  of  Iowa,  Minnesota,  Kansas,  Nebraska,  and  one-half  of  that  of  Il- 
linois and  Wisconsin  be  taken  into  the  account,  estimating  these  products  at 2,785,350 
tons  weight,  and  the  increased  cost  at  $1.25  per  ton,  average. 

But  that  added  freight  charge,  thus  resulting  from  the  absence  of  water-route 
competition  from  the  Upper  Mississippi  to  the  lakes  at  Chicago,  is  not  alone  collected 
on  the  cereal  products  of  the  States  enumerated.  It  is  none  the  less  chargeable  upon 
and  collected  on  the  exported  cattle  and  hogs,  the  cured  and  barrelled  meats,  the 
dairy  products,  and  the  imported  articles  of  those  several  States.  A  just  computa- 
tion of  those  charges  would  give  a  total  of  annual  loss  to  the  people  which  would  be 
deemed  altogether  fabulous  and  impossible  by  those  who  have  not  given  attention  to- 
the  facts  actually  involved. 

In  his  annual  report  to  Congress  for  1880,  Mr.  J.  Nimmo,  jr.,  of  the 
Bureau  of  Statistics  (page  154),  said : 

The  price  of  all  commodities  of  low  value  in  proportion  to  weight  is  in  every  mar- 
ket greatly  affected  by  the  cost  of  transportation.  Especially  is  this  the  case  in  re- 
gard to  the  surplus  agricultural  products  of  the  Western  and  Northwestern  States. 
The  low  rates  which  prevail  for  transportation  upon  the  northern  water-line,  there- 
fore, exercise  an  important  regulating  influence  over  the  price  of  all  the  surplus  pro- 
ducts of  the  West,  not  only  in  the  markets  of  the  Atlantic  sea-board  States,  but  also 
in  foreign  countries.  It  is  due  chiefly  to  this  fact  that  during  the  last  ten  years  the 
value  of  domestic  exports  from  the  United  States  has  greatly  increased,  and  that 
since  the  year  ended  June  30,  1875,  the  value  of  exports  from  the  United  States  has 
largely  exceeded  the  value  of  imports  to  the  United  States. 

In  an  argument  before  the  Committee  on  Commerce  of  the  House  of 
Eepresentatives,  made  in  opposition  to  the  "  Reagan  bill,"  in  March, 
1882,  Mr.  G.  R.  Blanchard,  the  well-known  railroad  attorney,  also  said 
(as  see  the  report  thereof,  printed  by  authority  of  that  gentlemen  in 
New  York,  page  16) : 

The  rail-carrying  charges  upon  the  great  east-bound  traffic  to  the  sea-board  for  both 
consumption  and  export  are,  therefore,  and  must  continue  to  be,  limited  by  natural 
causes,  and  cannot  be  beyond  or  as  much  as  those  which  in  their  absence  would 
be  deemed  fair  and  reasonable,  and  are  always  below  the  rates  for  like  distances, 
articles,  and  speed  by  rail  anywhere  in  the  world.  So  potent  are  these  facts  that 
it  is  within  the  power  of  and  is  often  the  case  that  the  combination  or  independent 
action  of  a  few  sail-vessels  at  Chicago  can,  in  their  seasons  of  navigation,  procure 
rates  from  owners  of  an  equal  capacity  of  Erie  Canal  boats  from  Buffalo  to  New 
York,  which,  added  to  their  own  rates  to  Buffalo  and  transfer  charges,  will  fix  and 
have  in  actual  practice,  fixed  and  regulated,  the  entire  eastward  through  maximum 

rail- freight  charges  for  a  time  upon  all  kinds  of  grain  and  many  other  articles. 

»**»*** 

This  combined  wealth  of  interior  water-ways  forms  an  aggregate  of  parallel  rivalry 
unknown  in  other  countries,  and  so  restrains  not  only  through  but  local  and  interior 
rates  to  maxima  which  have  been  constantly  decreasing  for  the  past  ten  years,  which 
can  never  exceed  the  water  prices,  risks,  and  charges,  and  which  afford  the  people  a 
strong  and  just  security  against  transportation  extortion  or  abuse.  Can  any  safer 
limitation  or  check  be  legislated  than  the  inflexible  limitations  nature  enforces  in  its 
uncontrollable  rivalry  f  *  »  *  The  application  of  water  results  ascertained  as  I 
have  described  are  inexorable  in  their  effects  upon  railroad  rates  within  periods 
ranging  from  seven  to  eight  months  in  each  calendar  year,  and  usually  all  the  year 
in  rivalry  with  Western  rivers.  *  *  *  In  view  of  all  these  facts  I  now  say  with 
Mr.  Fink :  "Compared  with  this  natural  powerful  regulator  of  railroad  transpor- 
tation -tariffs  the  efforts  of  State  or  Congressional  legislation  to  prevent  extortion- 
ate charges  appear  to  those  at  all  conversant  with  the  subject  as  perfectly  useless." 

and  Fernandina — and  from  there  into  the  interior  of  the  Gulf  States— Augusta,  At- 
lanta, Macon,  Montgomery,  Seltua,  &c.  *  *  *  These  roads  *  *  *  are  obliged 
to  follow  the  reduction  made  via  the  Baltimore  road,  and  which  were  primarily  made 
on  account  of  the  existence  of  the  Erie  Canal  and  the  opening  of  navigation.  The 
earne  way  in  regard  to  the  west-bound  business,  *  *  *  so  that  it  may  be  said  that 
the  rail  rates  are  kept  in  check  by  water  transportation." 


INTERSTATE    COMMERCE.  205 

Such  expressions  of  authoritative  opinion  as  to  the  resistless  regu- 
lation of  freight  charges  inseparable  from  the  maintenance  of  free 
water  routes  of  transportation,  could  be  further  quoted  indefinitely.  It 
is  not  necessary  to  so  multiply  words  for  your  consideration. 

It  remains  only  to  solicit  your  attention  to  the  fact  that  the  General 
Government  has  done  for  the  south-bound  and  return  commerce  of  the 
Upper  Mississippi  Valley  precisely  the  valuable  service  now  asked  for 
at  its  hands  in  the  interest  of  the  east  and  west  commerce  of  the  same 
people.  It  bas  removed  obstructions,  cut  channels  through  flinty  rock, 
dug  out  sand-bars,  and  excavated  a  canal,  the  latter  at  a  cost  of  about 
$5,000,000.  That  work  has  been  well  performed.  It  has  secured  a 
great  boon  to  the  people.  It  is  still  being  carried  on  and  perfected 
year  by  year.  As  a  regulating  power  in  determining  freight  charges  to 
and  from  Saint  Louis,  by  the  railroads  paralleling  the  great  river,  the 
beneficence  of  that  continued  work  of  internal  improvement  has  been 
great  beyond  compute.  But  a  regulation  as  to  rates  of  transportation 
between  the  West  and  the  East  is  surely  as  needful  now,  to  say  the 
least,  as  was  ever  a  similar  one  to  the  commerce  between  the  North 
and  the  South.  Unquestionably,  indeed,  were  a  comparison  needed,  as 
it  is  not,  inexpensive  access  to  their  Eastern  and  so  to  their  foreign 
markets,  by  the  products  of  the  Upper  Mississippi  Valley,  has  come  to 
be  an  object  of  more  anxious  concern  than  can  be  the  reaching  of 
markets  in  any  other  direction.  But,  the  permanent  necessity  of  the 
people  of  that  valley  is  certainly  that  of  a  choice  of  markets — for  cheap 
transportation  to  the  East  as  to  the  South.  The  latter  has  been  fully 
secured  through  the  beneficence  of  Congress,  the  former  is  yet  denied. 
But  why  should  not  the  former  also  be  granted,  as  a  result  of  wise  and 
generous  action  on  the  part  of  the  same  legislative  authority,  deter- 
mining its  decrees  in  the  interest  of  the  whole  body  of  the  people. 

Said  the  report  of  Maj.  W.  H.  H.  Benyaurd,  U.  S.  A.  (hereinbefore 
quoted),  in  presenting  the  reasons  which  urge  the  construction  of  the 
Hennepiu  Canal :  "  It  is  the  peculiar  misfortune  of  the  Upper  Missis- 
sippi Eiver  that  it  has  no  share  in  the  vast  benefits  which  accrue  to  the 
lake  region  in  the  matter  of  competition  and  cheap  transportation,  se- 
cured through  the  use  of  a  water  route  which  has  its  western  terminus 
at  Chicago  and  its  eastern  in  New  York  Harbor."  How  serious  is  that 
"  peculiar  misfortune,"  thus  cited  to  the  attention  of  Congress,  may  be 
more  clearly  understood  from  the  statement  of  Mr.  G.  R.  Blanchard, 
made  in  the  course  of  his  argument  before  the  House  committee  herein- 
before quoted  from.  He  says : 

The  rates  being  fixed  from  Chicago  in  manner  I  have  proven,  that  city  is  now 
recognized  as  the  Western  pivotal  point  on  which  all  others  hinge  and  turn,  and  all 
other  competing  points,  whether  of  railway  against  water,  or  railway  against  rail- 
way, rail  rates  are  fixed  by  certain  percentages  of  difference  more  or  less  from  Chi- 
cago as  their  distances  vary. 

That  "  peculiar  misfortune  "  of  the  people  of  the  Upper  Mississippi 
Valley  is,  then,  one  of  no  slight  moment  j  rather  it  is  that  of  an  oner- 
ous burden.  It  is  one  which  constantly  presses.  It  is  borne  only  at 
the  cost  of  many  millions  annually,  for  it  is  the  u  misfortune"  of  en- 
forced submission  to  an  utter  absence  of  any  approach  to  "  regulation" 
as  to  east  and  west  rates  of  freight  charges.  That  absence  of  just  reg- 
ulation is  due  to  a  total  deprivation  of  the  influences  of  the  lake  and 
canal  competition.  Such  dispossession  would  instantly  end  were  the 
Upper  Mississippi  accorded  an  all  water  connection  with  Chicago.  The 
construction  of  the  Hennepin  Canal  would  secure  that  connection.  As 
long  ago  as  June,  1874  (see  Report  H.  R.  No.  643,  Forty- third  Congress, 
first  session),  in  a  letter  to  the  House  Committee  on  Railways  and 


206  INTERSTATE    COMMERCE. 

Canals,  Mr.  Charles  Randolph,  secretary  of  the  Board  of  Trade  of  Chi- 
cago, said  as  to  the  importance  of  such  canal  construction : 

If  this  waterway  were  completed,  it  would,  in  eft'ect,  give  an  unbroken  line  of 
transportation  by  water  from  the  headwaters  of  the  Mississippi  to  the  ocean,  either 
via  the  Saint  Lawrence  or  the  Hudson  Rivers.  Freights,  say  on  grain,  could  be  re- 
duced nearly  or  quite  one-half  of  the  general  average  between  all  points  on  the  Mis- 
sissippi River  and  Lake  Michigan.  *  *  What  the  Erie  Canal  is  to  the  regula- 
tion of  freight  rates  across  the  State  of  New  York  this  would  be  across  the  State  of 
Illinois,  and,  indeed,  of  Wisconsin,  too,  for  all  railroads  running  eastward  from  the 
Mississippi  River  would  be  brought  within  the  influence*  of  its  competition. 

The  committee  of  the  House  thus  written  earnestly  reported  in  favor 
of  the  construction  of  the  Hennepin  Canal  as  the  means  to  a  com- 
pleted Michigan  and  Mississippi  Canal  to  connect  the  great  lake  route 
of  transportation  at  Chicago  with  that  of  the  great  river  at  Eock  Island. 
So  also  has  similarly  reported  every  committee  of  Congress  from  that 
date  to  this,  to  whom  the  proposition  for  such  a  canal  has  been  referred. 

Again,  through  your  committee,  Congress  is  called  upon  to  consider 
the  "  peculiar  misfortune "  of  the  Upper  Mississippi  Valley,  in  its  dep- 
rivation of  the  eminently  righteous  regulation  of  freight  charges  which 
has  been  so  conclusively  shown  to  be  easy  of  establishment.  In  the 
hope  and  faith  that  your  honorable  body  will  favor  and  assist  in  the 
early  institution  of  such  a  regulation,  to  be  secured  in  the  opening  up  of 
a  free  all- water  connection  between  Lake  Michigan  and  the  Mississippi,, 
this  argument  is  respectfully  submitted  to  your  consideration  by 

THE  MICHIGAN  AND  MISSISSIPPI 

CANAL  COMMISSION, 
Per  EDWARD  RUSSELL,  Secretary. 

DAVENPORT,  IOWA,  July  15,  1885. 

N.  B. — The  commission  in  behalf  of  whom  this  argument  has  been 
prepared  and  submitted  is  composed  of  the  following-named  gentle- 
men: Franklin  Edson,  F.  B.  Thurber,  A.  B.  Miller,  L.  J.  N.  Starr, 
George  B.  Douglas,  New  York  ;  J.  L.  Swits,  J.  J.  Marlette,  Schenec- 
tady,  X.  Y.  j  J.  H.  Foster,  Breese  Stevens,  Madison,  Wis. ;  W.  T.  Price, 
Black  River  Falls,  Wis. ;  William  R.  Marshall,  Saint  Paul,  Minn. ;  W. 
S.  King,  Minneapolis,  Minn,  ;  George  H.  Hopkins,  Detroit.  Mich. ;  Pey- 
ton Ranney,  Kalamazoo,  Mich. ;  Dr.  James  Heuston,  Northfield,  Mich.; 
A.  O.  Marshall,  Joliet,  111. ;  L.  B.  Ray,  Morris,  111. ;  W.  T.  Dowdallr 
Julius  S.  Star  r,  Peoria,  111. ;  T.  D.  Brewster,  Peru,  111.  ;  H.  D.  Dement, 
David  T.  Littler,  Springfield,  111. ;  Ralph  Plumb,  Streator,  111. ;  L.  D. 
Witing,  Tiskilwa,  111. ;  William  Bross,  J.  C.  Dore,  C.  B.  Farwell,  Murry 
Nelson,  Jesse  Spalding,  L.  Z.  Leiter,  Carter  H.  Harrison,  E.  F.  Law- 
rence, C.  C.  Bonney,  Frank  Gilbert,  Guy  Magee,  Herman  Raster,  Mar- 
tin Russell,  Andrew  Shuman,  Melville  E.  Stone,  Chicago,  111.;  J.  W. 
Green,  Edward  Russell,  Davenport,  Iowa ;  S.  M.  Clarke,  Keokuk,  Iowa ; 
John  Mahin,  Muscatine,  Iowa ;  General  R.  J.  Oglesby,  Lincoln,  111. ; 
Jason  C.  Ayers,  Joseph  Utley,  Dixon,  111. ;  James  M.  Allan,  Geneseo., 
111. ;  Williamson  Durley,  Hennepin,  111. ;  T.  J.  Robinson,  Rock  Island, 
111. ;  Charles  H.  Deere,'Moline,  111. 

Officers. — Joseph  Utley,  president ;    J.  C.  Dore,  first  vice-president ; 

A.  B.  Miller,  second  vice-president ;  Murry  Nelson,  treasurer ;  Edward 
Russell,  secretary. 

Executive  committee. — William  Bross,  Murry  Nelson,  J.  C.  Dore,  Pey- 
ton Ranney,  C.  B.  Farwell,  L.  B.  Ray,  A.  O.  Marshall,  Joseph  Utley,  A. 

B.  Miller,  Edward  Russell. 

*See  also  on  this  point  the  words  of  Railroad  Commissioner  Fink,  referred  to  in 
previous  foot-note. 


INTERSTATE    COMMERCE. 


207 


THE     MISSISSIPPI     AND      MICHIGAN     CANAL 
CALLED  THE   HENNEPIN  CANAL. 


USUALLY 


The  following  memorial  was  received  by  the  committee  from  Chi- 
cago: 

We  beg  most  respectfully  to  solicit  your  candid  and  careful  atten- 
tion to  the  following  synopsis  of  facts,  showing  the  imperative  neces- 
sity for  the  early  construction  of  the  Henuepiu  Canal.  That  it  is  a 
national  work  will  more  fully  appear  when  it  is  stated  that  Western  Illi- 
nois, and  Wisconsin,  Iowa,  Minnesota,  and  Dakota  would,  by  its  con 
struction,  have  direct  water  transit  with  all  the  States  of  the  Atlantic 
sea-board,  and  with  Europe.  In  short,  it  would  connect,  by  a  canal 
only  74  miles  long,  many  States  through  the  great  waterways  of  the 
continent — the  lakes  with  the  Mississippi.  (See  map.) 


As  to  the  character  of  the  line,  the  feasibility  of  its  construction, 
careful  estimates  of  its  cost  (about  $7,000,000),  the  vast  benefits  it 
would  coufer  upon  the  whole  country,  and  all  other  important  facts  in 
relation  to  the  business  it  would  command,  we  respectfully  call  your 
special  attention  to  the  reports  of  the  Government  engineers:  H.  G. 
Wright,  general-in-chief  of  Engineers,  and  W.  H.  H.  Benyaurd,  major 
of  Engineers,  as  embodied  in  the  message  of  the  President  of  the  United 
States,  January  8,  1884,  Senate  executive  document  No.  38. 

We  add  that  such  authorities  as  Mr.  Nimmo  and  Mr.  Fink,  railway 
commissioner,  have  shown  that  the  reduction  of  freights  by  the  lakes 
and  Erie  Canal  benefits  all  the  States  of  the  sea-board  way  down  to 
Georgia. 

There  is,  and  can  be,  no  job  in  it,  for  it  is  proposed  that  it  be  con- 
structed by  the  engineers  of  the  Government,  under  the  direction  of  the 
Secretary  of  War.  The  entire  cost  of  the  canal  complete  is  carefully 
estimated  by  Major  Benyaurd,  United  States  Army,  at  less  than 
$7,000,000.  The  money  saved  to  the  people  in  freights  caused  by  this 
canal,  if  then  completed,  011  the  crop  of  1880,  was  estimated  at 
$3,482,607,  enough  to  pay  for  the  canal  every  two  years.  But  let  us  be 


208  INTERSTATE    COMMERCE. 

more  specific,  and  take  the  crop  of  1884.  Official  Government  esti- 
mates for  the  crop  of  wheat  in  the  Upper  Mississippi  States  for  1884 
were: 

Bushels. 

Wheat 188,349,000 

Corn 837,574,000 


Total 1,025,923,000 

Suppose  only  one  half  is  to  be  shipped  eastward  for  consumption 
there  and  export,  and  we  have  502,971,500  bushels ;  if  only  1  cent  per 
bushel  were  saved  to  the  people  by  water  transit,  the  amount  would  be 
$5,029,615;  at  5  cents  per  bushel,  the  fabulous  sum  of  $25,148,055 
would  be  left  in  the  pockets  of  the  people. 

But  the  mere  movement  of  the  two  cereals  eastward  will  not  furnish 
half  the  business  of  the  canal.  Barley,  oats,  animal  products,  and 
other  articles  will  swell  the  amount  immensely,  while  the  coal  and  iron 
of  Indiana,  Ohio,  and  Pennsylvania,  groceries  and  other  merchandise, 
will  furnish  a  vast  business  from  the  eastward,  certainly  enough  to  leave 
in  the  pockets  of  the  people  more  than  the  cost  of  the  canal  every  year. 

It  is  evident  that  this  canal  is  a  part,  and  a  most  essential  part,  of  the 
improvement  of  the  Mississippi,  on  which  vast  sums  are  spent  every 
year,  making  directly  available  600  miles  of  navigation  above  Eock 
Island,  and,  say,  200  miles  below ;  thus  giving  to  the  people  along  that 
great  waterway  of  the  continent  access  to  the  cheaper  lake  and  Erie 
Canal  lines  to  the  sea-board.  It  would  be  worth  millions  to  them  every 
year. 

Water  transit  for  freights  is  proved  to  be  the  cheapest  possible.  As 
an  example,  coal  was  carried  at  an  average  charge  for  the  season  of 
1884,  from  Erie  and  Buffalo  to  Chicago,  about  1,000  miles,  for  64  cents 
per  ton ;  thence  to  the  Mississippi  River,  200  miles,  the  charge  was 
$2  ;  for  the  next  100  miles  it  mounts  up  to  $4  per  ton  from  Chicago ; 
and  in  Western  Iowa  and  Minnesota  it  runs  upward  to  a  much  higher 
figure. 

Congress,  by  liberal  appropriations,  deepened  the  channel  through 
the  Saint  Clair  Flats  so  that  steamers  with  several  barges  could  be  used 
This  put  down  the  freight  charges  between  Chicago  and  Buffalo  6  cents 
per  bushel.  Following  the  spirit  of  the  age,  the  legislature  of  the  State 
of  New  York  wisely  abolished  the  tolls  on  the  Erie  Canal,  and  this  re- 
duced freights  to  New  York  6  cents  more,  so  that  the  all-water  transit 
between  Chicago  and  New  York,  instead  of  being  17  and  20  and  even 
25  cents  as  a  few  years  ago,  now  rules  at  about  6  cents,  sometimes  a 
fraction  above  and  occasionally  a  small  fraction  below  that  figure.  In 
summer  the  all-rail  freights  per  bushel  are  generally  a  fraction  above 
that  of  water,  depending  upon  competition  and  the  demand  for  export, 
but  in  winter  the  prices  range  from  12  to  21  cents  per  bushel.  No  com- 
ment is  here  needed. 

Take  another  example.  The  freight  on  a  bushel  of  wheat  between 
Northern  Iowa  and  Chicago,  some  400  miles,  is  and  has  been  for  the  sea- 
son of  1884, 10.8  to  16.8.  From  points  in  Nebraska  and  Southern  Minne- 
sota 16.8  to  21  cents ;  the  highest  figure  being  more  than  the  cost  of 
transporting  a  bushel  of  wheat  in  June,  1884,  from  Chicago  to  Liverpool, 
about  4,500  miles — showing  at  least  4,000  miles,  for  the  same  price,  in 
favor  of  water  transit.  So  oppressive  have  been  the  enormous  freight 
charges  for  some  time  past,  that  wheat  was  sold  west  of  the  Missouri 
Kiver  for  30  cents  per  bushel,  and  corn  for  12,  making  its  value  by  the 
ton  less  than  that  of  coal,  so  that  producers  have  actually  burned  it  for 


INTERSTATE    COMMERCE.  209 

fuel.  It  is  therefore  plain  that  if  Congress  does  not  want  the  vast  fer- 
tile West — the  Upper  Mississippi  Valley — to  go  back  to  its  primitive 
desolation,  they  must  provide  cheaper  water  transit  for  its  cereal  and 
other  products. 

The  water  lines  from  New  York  by  canal  and  lake  now  end  at  Chicago. 
With  the  Hennepin  Canal  they  would  be  extended  to  Saint  Paul.  In- 
stead of  the  freight  on  a  bushel  of  wheat  between  Minnesota  and  North- 
ern Iowa  and  Chicago  being  from  16  to  21  cents  per  bushel,  Major 
Benyaurd  has  shown  that  by  river  and  canal  it  would  be  only  (>  cents. 
This  would  reduce  the  cost  of  the  bread  on  every  table  of  the  people  of 
the  sea-hoard  States  from  115  to  20  per  cent,  for  every  day  in  the  year. 
It  would  also  leave  millions  of  money  among  the  people  of  the  Upper 
Mississippi  States.  Again  it  is  asked,  is  not  the  Hennepin  Canal  a  most 
important  national  work? 

Nearly  every  intelligent  man  and  body  of  men  who  examine  the  proj- 
ect carefully,  and  without  prejudice,  cordially  indorse  the  measure. 
Memorials  have  been  sent  to  Congress  in  its  favor  by  the  boards  of  trade 
of  Chicago,  Saint  Paul,  Minneapolis,  La  Crosse,  Dulnth,  Davenport, 
ivock  Island,  Buffalo,  Syracuse,  and  New  York.  The  national  board  of 
trade  in  'Washington,  and  the  industrial  congress,  at  its  meeting  in 
Chicago  in  1884,  strongly  urged  the  construction  of  the  canal.  The  leg- 
islature of  Iowa  has  indorsed  the  measure  five  times.  The  legislature 
of  Illinois  and  the  State  senate  of  New  York  have  also  urged  its  con- 
struction. The  produce  exchange  of  New  York,  having  some  3,000 
members,  the  largest  and  probably  the  most  conservative  body  of  com- 
mercial men  in  the  country,  have  indorsed  it  strongly.  They  say  that — 

Whereas  the  completion  of  a  waterway  from  the  Mississippi  River  to  Lake  Michi- 
gan by  the  construction  of  the  Heuuepin  Can«l  promises  to  realize  advantages  of 
national  importance ;  and 

'  Whereas  t  lie  re  are  insuperable  obstacles  in  the  way  of  having  such  improvement 
carried  out  by  private  enterprise;  and 

Whereas  the  building  of  the  Hcnuepin  Canal  may  justly  be  regarded  as  part  of  the 
improvement  of  the  Mississippi  River, 

Resolved,  That  in  the  opinion  of  the  New  York  Produce  Exchange  the  United  States 
Government  should  undertake  to  build  the  Hennepin  Canal,  and  to  maintain  the 
Mime  free  for  all  time  to  come;  and,  further, 

lh-solrcd,  That  otfr  Senators  and  Representatives  be .  requested  to  join  the  Repre- 
sentatives of  other  States  in  providing  the  necessary  legislation  for  carrying  out  this 
plan. 

That  this  canal  will  benefit  the  whole  nation  there  cannot  be  a  par- 
ticle of  doubt.  The  vast  grain-producing  States  of  the  Northwest  must 
have  cheaper  transit,  if  America  is  to  retain  her  supremacy  in  the  mar- 
kets of  Europe.  Russia,  Hindostan,  and  Australia  are  striving  earn- 
estly to  get  the  control  of  that  market,  and  would  not  its  loss  to  us  be 
a  calamity  to  every  State  in  the  Union  f 

Even  the  railways  themselves,  it  is  believed,  would  be  benefited  by 
this  improvement,  for  it  would  relieve  them  from  the  carriage  of  heavy 
products,  stimulate  passenger  travel  almost  indefinitely,  and  vastly  in- 
crease the  amount  of  all  kinds  of  merchandise  which  the  people  would 
order  by  them  and  consume.  It  would  ward  oif  all  hostile  legislation 
and  vindictive  granger  movements,  sure  to  assume  gigantic  proportions 
if  the  present  enormous  freight  charges  are  stubbornly  continued.  The 
construction  of  this  canal  would,  therefore,  be  a  great  boon  to  the  rail- 
ways themselves.  While  perhaps  somewhat  a  competitor,  it  would 
really  be  their  best,  their  most  enduring  friend. 

Enrich  the  people  of  the  vast  and  immensely  productive  States  of  the 
Upper  Mississippi  Valley,  and  you  benefit  and  enrich  the  entire  nation. 
16232  AP 14 


210  INTERSTATE    COMMERCE. 

In  fact,  connect  by  the  Hennepin  Canal  the  vast  waterways  of  the 
Mississippi  Valley  with  the  Great  Lakes,  and  you  complete  for  this 
country  the  most  needed — ay,  the  most  important — commercial  enter- 
prise of  the  age. 

THE  SIGNATURES. 

E.  Nelson  Blake,  Geo.  T.  Smith,  James  H.  Milne, 
Geo.  D.  Ruiusey,  L.  G.  Holley,  James  M.. Ball, 
Jno.  J.  Bryant,  Geo.  H.  Wheeler,  Jno.  C.  Hately, 
W.  H.  Crocker,  W.  W.  Catlin,  Edward  Norton, 
W.  S.  Seaverns,  Geo.  J.  Brine,  W.  D.  Gregory, 
Wm.  H.  Beebe,  Geo.  G.  Barker, 

Composing  the  board  of  directors  of  the  Chicago  Board  of  Trade. 

F.  A.  Howe.  Dan.  E.  Richardson.  W.  M.  Egan. 
Geo.  D.  Baldwin.  Geo.  Stewart.  J.  H.  Jones. 
Josiah  Stiles.  Wm.  T.  Baker.  C.  M.  Tanrite. 
W.  E.  McHenry.  H.  O.  Mahle.  E.  W.  Ferguson. 
Geo.  M.  How.  J.  H.  French.  G.  T.  Bedford. 
J.  P.  Sherwin.  A.  A.  Kahn.  Win.  J.  Pope. 
O.  W.  Clapp.  M.  A.  Seymour.  J.  J.  McDermid. 
J.  H.  Horton.  John  Girden.  T.  T.  Morford. 

D.  H.  Lincoln.  G.  W.  Couch.  Chas.  D.  Hamill. 
C.  A.Wvhyland.                        T.  C.  Smith.  C.J.  Singer. 

S.  B.  Webber.  W.  Aug.  Ray.  B.  F.  Stauffel. 

G.  R,  Nichols.  S.  H.  O'Connor.  E.  B.  Bauman. 

E.  B.  Stevens.  D.  E.  Sibley.  Geo.  W.  Sidwell. 
Jno.  Hill,  jr.  J.  C.  Diffenderfer.  A.M.Wright. 
Cyrus  H.  Adams.  J.  H.  Dole.  D.  L.  Seymour. 
W.  W.  Hunter.  A.  Eddy,  jr.  W.  P.  Freeman. 
M.  Rosenbanm.  J.  L.  Ward.  Jos.  M.  Watte. 
C.  E.  Foss.  H.  Rang.  H.  J.  Coon. 

C.  R.  Clark.                              Gallup,  Clark  &  Co.  J.  C.  King. 

H.  C.  Teed  &  Co.                     George  Lunt.  Samuel  Hice. 

Wm.  Bross,  President  Tribune  Compauy  ;  H.   F.   Eames,    Pres't    Commercial  Nat'l 

Joseph  Medill,  Editor  in  chief.        .  Bank. 

Geo.  P.  Upton,  Stanley  Waterloo,  R.  W.  John  B.  Meyer,  Cashier  same. 

Patterson,  jr.,  E.  Colbert,  James  B.  Run-  Orson  Smith,  Vice-Pres't  Merchants'  Loan 

nion,  Geo.  Forrester,  C.  B.  Evans,  and  A.  and  Trust  Co. 

Cowles,  all  of  the  Chicago  Tribune.  George  Sturges,  Pres't  N.  W.  Nat'l  Bank. 

W.  H.  Ryder,  D.  D.  F.  C.  Osborne. 

Sam'l  M.  Nickerson,    Pres't    First    Nat'l  Wm.  A. Hammond. 

Bank.  Michael  Ullrich. 

L.  J.  Gage,  Vice-Pres't  First  Nat'l  Bank.  Jno.  J.  Mitchell. 

E.Buckingham.  J.  J.  P.  Odell,  Vice-Pres't    Uuion     Nat'l 

John  R.  Walsh,  Pres't  Chicago  Nat'l  Bank.  Bank. 

H.  H.  Nash,  Cashier  same.                    •  Andrew  Shuman,  Editor  Chicago  Even- 

Geo.  Schneider,  Pres't  Nat'l  Bank  of  Eli-  ing  Journal. 

uois.  W.  K.  Sullivan,  Florence  McCarthy,  and 

Isaac  G.  Lombard,  Pres't  Nat'l  Bank  of  John  R.  Wilson,  Evening  Journal. 

America. 


A  SUGGESTION. 

Letter  received  by  the  chairman  from  John  S.  Thompson,  89  Madison 

Street,  Chicago. 

Would  it  not  be  advisable  to  add  to  your  bill  relating  to  railway  com 
missioners  a  provision  requiring  all  transportation  companies  to  adopt 
a  tariff  of  freights  and  fares,  and  thereafter  prohibit  any  increase  with- 
out the  consent  of  the  couirnissionr.  This  would  leave  railways  free  to 
reduce  their  charges  but  never  to  increase  without  consent.  When  once 
reduced  they  must  so  remain,  unless  still  further  reduced.  It  seems  to 
me  that  a  provision  something  like  this  would  settle  this  perplexing 
question.  It  would  give  stability  to  railway  securities  and  prevent 


INTERSTATE    COMMERCE.   '  211 

ruinous  cuts  and  competition.  It  would  induce  railway  companies  to 
exercise  great  care  in  fixing  such  rates  as  would  enable  them  to  pay 
fixed  charges  and  a  fair  dividend  on  their  stock.  It  would  give  uni- 
formity in  charges  and  enable  producers  and  buyers  to  calculate  the 
value  of  products  in  the  market,  by  definitely  fixing  the  charges  for 
transportation. 

You  will  readily  comprehend  my  idea,  and  I  will  not  undertake  to 
argue  or  elaborate  it.- 


FAST  FKEIGHT  LINES. 
Letter  received  from  Charles  E.  Cox,  of  Quincy,  III. 

I  desire  to  call  the  attention  of  your  committee  to  a  matter  in  con- 
nection with  railroad  management  which  may  or  may  not  come  within 
the  scope  of  your  duties.  The  subject  to  which  I  refer  is  the  system 
of  the  alleged  fast-freight  lines.  To  keep  up  this  system  of  freight 
hauling,  the  so-called  fast  freight  companies  have  their  agents  at  all 
important  shipping  points,  at  which  points  all  of  the  lines  are  repre- 
sented— the  White,  Blue,  Star  Union,  Empire,  and  so  on — which  have 
their  agents  and  offices  to  support.  Salaries,  office  rent,  and  expenses 
of  office  in  the  aggregate  amount  to  a  large  sum  when  applied  to  the 
whole  commercial  community  which  must  run  up  into  the  millions  and 
is  a  direct  tax  on  the  commerce  of  the  country  and  an  entirely  needless 
expense.  This  business  could  as  well  be  done  by  the  railroad  companies 
themselves  and  thus  save  to  the  people  of  the  country  this  unnecessary 
tax.  I  believe  the  so-called  fast  freight  lines  are  really  owned  by  the 
officers  of  the  railroads.  I  call  your  attention  to  this  matter  that  it 
may  have  what  attention  the  subject  may  be  entitled  to. 


A  SERIOUS  EVIL. 

The  following  letter  received  by  the  chairman  from  Mr.  W.  H.  Beebe, 
a  commission  merchant  of  Chicago,  dated  August  26,  L885,  is  supple- 
mentary to  his  statement  before  the  committee  (see  testimony,  page 
653): 

"  In  my  testimony  before  the  Senate  Committee  on  Interstate  Com- 
merce I  alluded  to  the  injustice  of  allowing  prominent  and  influential 
railroad  officials  to  become  partners  in  business  houses  which  come  in 
direct  competition  with  their  patrons,  and  referred  to  the  fact  that  at 
one  time  we  were  obliged  to  quit  doing  any  business  on  the  Rock  Island 
road  because  prominent  officials  were  interested  in  grain  commission 
houses.  I  evidently  tread  on  somebody's  corns,  for  I  heard  from  the 
president  of  the  Bock  Island  road  and  found  out  (indirectly)  that  it  hit 
somebody  here.  I  am  only  sorry  that  I  did  not  carry  the  matter  a  little 
further  and  give  you  some  more  information,  and  take  this  means  of 
doing  so.  To  be  sure,  what  I  now  state  to  you  is  partly  and  largely 
inference,  and  you  must  consider  it  as  such  ;  but  that  you  may  know 
where  to  look,  1  can  particularize  to  a  certain  extent : 

"  It  has  been  notorious  in  the  trade  for  some  years  past  that  Reynolds 
Brothers,  of  Toledo,  had  an  inside  on  the  Wabash  road,  which  rendered 
it  useless  for  other  houses  to  solicit  business  on  that  line  of  road,  and 


212  INTERSTATE   COMMERCE. 

it  was  stated  to  me  in  Toledo  a  year  or  so  ago  that  it  was  because  Mr. 
Hopkins,  one  of  tbeir  prominent  officials,  was  a  partner  in  that  house. 

"  I  have  a  letter  before  me  from  my  western  traveling-man  complain- 
ing of  the  discriminations  made  by  the  Union  Pacific  Kailroad  in  favor 
of  the  firm  of  Himebangh  «fc  Merriam,  and  lie  states  that  it  is  generally 
believed  on  the  Union  Pacific  Railroad  that  the  traffic  manager  and  the 
general  freight  agent  at  Omaha  are  partners  with  this  house. 

11  What  we  positively  know  with  regard  to  these  two  roads  is  that  it 
is  useless  for  any  outside  concern  to  solicit  business  as  against  these 
two  firms  mentioned.  The  other  fact  that  may  be  considered  as  posi- 
tively known  is  that  they  have  rebates  and  discriminations  made  in  their 
favor  which  no  other  parties  can  get.  Whether  this  is  because  the 
officials  of  the  roads  are  interested  in  these  houses 'or  not  is  a  matter  of 
uncertainty,  and  yet  it  is  so  reported. 

"  I  had  a  talk  with  Mr.  Eipley,  general  freight  agent  Chicago,  Bur- 
lington and  Quincy,  who  agreed  with  me  that  I  was  right  in  advocating 
the  principle  that  no  prominent  railroad  officials  should  engage  in 
business  where  it  came  in  competition  with  their  patrons,  and  he  stated 
that  on  their  road  their  officers  were  not  allowed  to  make  any  invest- 
ments on  lines  of  their  road  without  the  consent  of  the  president  and  a 
vote  of  the  board  of  directors,  and  not  allowed  to  go  into  any  business. 

"  I  think  that  this  feature  should  be  embodied  in  any  bill  and  should 
be  kept  in  view  by  any  commission  that  undertook  to  regulate  railroad 
matters  as  between  the  States." 


THE  EFFECT  OF  PUBLICITY. 

The  following  letter,  received  by  the  chairman  from  Mr.  Charles  A. 
Chapin,  of  Milwaukee,  dated  August  17,  1SS5,  illustrates  the  advan- 
tages of  publicity  in  railroad  management  by  showing  the  effect  of  the 
publication  of  his  statement  before  the  committee  (see  testimony,  p.  688) 
upon  the  officials  to  whom  he  referred : 

"At  the  time  I  testified  before  your  select  committee  at  Chicago,  May 
15  last,  my  firm  had  some  $700  of  the  overcharges  which  I  then  spoke 
of  due  and  unpaid,  most  Of  which  had  been  due  for  upward  of  a  year, 
and  portions  for  more  than  two  years.  One  claim  of  about  $1:23  was  in 
the  hands  of  a  general  freight  agent  in  Chicago.  A  part  of  my  testi- 
mony was  published  in  a  Chicago  evening  paper  of  that  date.  Before 
night  he  telegraphed  for  another  statement  of  the  account,  and  in  one 
week  from  that  day  our  firm  received  a  remittance  in  full  for  the  amount 
of  that  claim.  Since  then  other  installments  have  been  paid,  so  that 
now  only  about  $100  of  those  old  claims  remain  unpaid. 

"  I  have  made  no  additional  effort  to  have  them  paid,  and  I  attribute 
the  payment  to  the  fact  of  publicity  to  the  situation  and  the  investiga- 
tion of  the  whole  subject  by  your  committee.  The  railroad  officials  sud- 
denly seem  to  wake  up  to  the  injustice  they  were  inflicting  on  the  busi- 
ness public,  and  begin  to  make  amends. 

"AN  INSTANCE  OF  TIN  JUST  DISCRIMINATION. 

"  I  do  not  have  the  slightest  doubt  but  that  if  proper  national  legis- 
lation on  that  subject  is  entered  into  that  a  vast  amount  of  good  to  the 
business  public  will  be  the  result.  Eate-cutting  seems  to  be  the  great 


INTERSTATE    COMMERCE.  213 

curse  in  the  freight  business.  I  will  illustrate :  About  two  weeks  ago 
I  was  of  the  opinion  that  the  tariff  of  July  13  was  being  cut,  and  that 
Chicago  shippers — a  few — were  getting  the  benefit  of  such  cut.  I  made 
a  pressure  on  all  the  lines  here  for  a  reduction,  showing  them  plainly 
from  documents  and  price-lists  that  such  cuts  were  being  made.  They 
denied  the  matter  in  toto  and  refused  to  make  any  concessions  to  me. 
It  now  transpires  that  several  days  before  I  made  a  request  for  a  reduc- 
tion an  agent,  or  agents,  from  Chicago  bad  given  shippers  in  that  market 
a  5-cent  cut  in  freight,  and  immediately  the  Chicago  shippers  tele- 
graphed to  this  market  and  bought  some  twenty  car-loads  and  sold  it 
on  the  cut  rate  to  one  of  our  regular  buyers  at  Troy,  ]ST.  Y.,  thereby 
making  a  handsome  profit  and  laying  the  freight  down  at  destination 
some  $7  per  car  cheaper  than  we  could.  And,  further,  o'u  tbe  very  day 
I  was  pleading  for  an  equal  show  in  the  business  with  my  competitors 
one  of  the  agents  here  was  receiving  and  shipping  the  freight  out  under 
the  cut  referred  to.  When  I  put  the  question  to  the  agent  here  in  its 
true  light,  he  simply  remarked  that  he  had  nothing  to  do  with  it;  that, 
while  the  property  was  being  shipped  by  him,  the  contract  at  the  cut 
rate  was  made  at  Chicago ;  and,  further,  he  said  they  proposed  to  get 
all  they  could  for  carrying  property,  and  because  some  other  agent  of 
his  line  cut  the  rate  it  was  none  of  his  business.  So  that,  by  such  dis- 
crimination, allowing  some  such  undue  and  unjust  advantage  over 
others,  one's  business  must  of  necessity  be  badly  interfered  with,  if  not 
ruined. 


CHAELES  E.  PERKINS'S  STATEMENT. 

Statement  of  Charles  E.  Perkins,  president  of  the  Chicago,  Burlington 
and  Quincy  Railroad  Company. 

On  behalf  of  the  Chicago,  Burlington  and  Quincy  Eailroad  Company, 
I  beg  leave  to  submit  the  following  reply  to  your  communication  of 
April  10. 

However  widely  opinions  may  differ  about  the  wisdom  of  permitting 
railroad  construction  to  be  free,  I  suppose  it'is  safe  to  assume  that  such 
is  the  settled  policy  of  most  of  the  States  of  the  Union,  which  is  not 
likely  to  be  changed,  and  that  there  need  be  no  discussion  of  that  ques- 
tion now.  1  assume,  also,  that  the  English  common  law  doctrines  rela- 
tive to  common  carriers  are  not  open  to  discussion  at  this  time.  It 
might,  perhaps,  be  shown  that  they  are  not  all  philosophically  or  logic- 
ally applicable  to  .railroads,  that  those  doctrines  are,  many  of  them, 
relics  of  aii  age  when  transportation  was  carried  on  only  by  horse-power 
or  water  craft,  which  are  not  fixtures  like  railroads,  and  when  the  whole 
transportation  question  was  very  different  from  the  transportation  ques- 
tion since  the  advent  of  steam  ;  but,  nevertheless,  those  old  laws  or  rules 
for  the  government  of  all  common  carriers  are  the  law  of  the  land  to-day. 
With  this  reference  to  the  ground  upon  which  I  do  so,  I  will  endeavor 
to  answer  the  questions  suggested  in  your  letter. 

(1)  The  lit-st  method  of  preventing  the  practice  of  extortion  and  unjnst  discrimination 
by  corporations  engaged  in  interstate  commerce. 

An  appeal  to  the  courts  would  seem  to  be  the  best  and  only  feasible 
method  of  preventing  such  practice,  if,  and  when,  it  requires  prevention. 
The  common  law  will  protect  individuals  against  extortion  and  unjust 


214  INTERSTATE    COMMERCE. 

discrimination  by  common  carriers.  Very  little,  if  any,  extortion  or  un- 
just discrimination  exists,  however,  the  best  evidence  of  which  is  that 
so  lew  cases  are  taken  into  court,  or  otherwise  made  public.  In  States 
where  railroad  commissions  have  been  established,  the  reports  and  rec- 
ords of  such  commissions  show  very  few  complaints  of  extortion  and 
unjust  discrimination,  and  still  fewer  decisions  by  the  commissions 
against  the  railroads.  The  argument  generally  used  against  appealing 
to  the  courts  is  that  the  expense  is  too  great,  and  that  individual  ship- 
pers of  freight  frequently  suffer  extortion  and  unjust  discrimination, 
rather  than  go  to  the  trouble  and  expense  of  a  lawsuit ;  which,  even  if 
true,  would  seem  to  show  that  the  amount  of  money  involved  is  small. 
But  the  truth  is,  the  commercial  relation  of  railroads  to  the  public  bas 
become  confused  with  the  legal  relation,  in  the  public  mind,  and  people 
think  they  have  a  right  to  expect  a  degree  of  perfection  in  the  commer- 
cial or  business  management  of  railroads  which  does  not  and  cannot 
exist  in  any  business.  Legally  speaking,  it  may  be  true  that  railroads 
are  bound  to  treat  everybody  with  absolute,  perfect,  and  exact  equality, 
but,  as  a  matter  of  business,  this  must  be  taken  to  mean,  so  far  as  prac- 
ticable. The  transportation  by  rail  of  commodities  which  are  bought 
and  sold,  is  commerce,  and  if  railroad  freight  rates  must  vary  as  mark- 
ets and  circumstances  vary,  and  if  the  judgment  of  men  must  be  trusted 
to  judge  when  and  what  variations  of  markets  and  circumstances  jus- 
tify variations  in  rates,  then,  in  so  far  as  men  are  imperfect,  their  judg- 
ments are  liable  to  be  so.  This  is  true  throughout  all  business  relations, 
and  it  is  no  more  true  of  railroad  business  than  of  any  other. 

Men  suffer  more  or  less  constantly  from  little  inequalities  of  treatment 
by  the  public  or  by  other  individuals,  which  are  not  of  enough  conse- 
quence to  be  taken  into  the  courts;  and  neither  the  Government  nor 
the  courts  are  absolutely  and  exactly  equal  in  their  treatment  of  all 
citizens  under  all  circumstances,  because,  owing  to  the  imperfections  of 
men,  it  is  impossible  to  be  so.  So  it  is  in  trade;  one  merchant  will  buy 
his  goods  more  cheaply  than  another  who  has  less,  experience  or  less 
skill,  or  less  capital  at  his  command.  But  little  inequalities  or  differ- 
ences in  judgment  it  seems  to  be  thought  should  be  eliminated  entirely 
from  the  business  of  railroads. 

"  The  law  does  not  concern  itself  about  trifles."  The  law  is  insufficient 
if  it  becomes  necessary  to  invoke  its  aid  to  substantially  protect  every- 
body against  extortion  and  unjust  discrimination  by  common  carriers, 
although  it  will  not  take  account  of  trifling  iuequalties  which  of  neces- 
sity occur  in  the  transaction  of  all  business.  To  discriminate  according 
to  the  value  of  the  service,  or  because  of  a  substantial  'difference  in  the 
conditions  or  circumstances,  is  not  unjust,  but  the  reverse,  and  js  as 
proper  for  a  railroad  as  for  a  lawyer  on  a  merchant.  In  practice,  rail- 
road charges  are  substantially  the  same  for  the  s'ame  service  under  like 
conditions. 

(•2)  The  reasonableness  of  the  rales  now  charged  by  such  corporations  for  local  arid 
through  traffic. 

The  measure  of  a  reasonable  price  is  the  value  of  the  article,  which  is 
determined  by  many  and  various  circumstances,  not  alone  the  cost  of 
producing  it,  nor  the  necessities  of  those  who  desire  to  use  it.  although 
the  cost  and  amount  of  the  supply  and  the  strength  and  amount  of  the 
demand  are  elements  in  fixing  the  price.  The  tendency  of  railroads  is 
to  equalize  prices  and  to  overcome  in  some  degree  the  advantages  pos- 
Besaed  bv  towns  and  cities  situated  on  lakes  and  rivers  and  the  ocean. 


INTERSTATE    COMMERCE.  215 

WHY   THROUGH   BATES   ARE  LOWER   THAN  LOCAL  RATES. 

What  are  called  "  through  rates ''  are  generally  lower  than  local  rates, 
because  through  business  is  wholesale  business,  being  larger  in  amount 
and  carried  a  longer  distance,  and  is  therefore  cheaper  to  carry  than 
the  traffic  of  locaj  stations,  and  also  for  the  additional  reason  that,  be- 
cause of  the  wholesale  character  of  the  business,  the  competition  among 
the  railroads  for  the  through  traffic  is.  as  a  rule,  more  severe,  and  also 
because  the  rates  on  through  business  are  generally  more  affected  by 
direct  water  route  competition  than  the  local  rates. 

The  low  rates  resulting  from  such  competition  are  sometimes  alleged 
as  a  reason  for  the  dissatisfaction  of  shippers  at  local  points,  who,  look- 
ing at  what  they  suppose  to  be  the  legal,  rather  than  at  the  commercial, 
relation  of  railroads  to  the  public,  consider  themselves  entitled  to  the 
same  rates,  or  perhaps  lower  ones.  But  it  is  obviously  inexpedient  to 
require  railroads  to  reduce  local  rates  becau.se  the  combined  influences 
of  a  large  aggregate  traffic,  and  the  competition  of  other  railroads,  or 
water  routes,  or  rival  markets,  which  influences  are  not  felt  at  local 
points,  may  make  it  for  their  interest  to  participate  in  the  through 
business  on  a  very  small  margin  of  profit.  It'all  traders  were  compelled 
to  sell  everything  on  tbe  basis  of  the  lowest  margin  of  profit  which  they 
might  find  it  necessary  to  take  on  some  one  thing,  the  effect  would  be 
the  same,  over  a  wider  field,  as  the  effect  of  requiring  railroads  either 
to  give  up  the  through  business  or  reduce  their  local  rates  correspoad- 
iugly.  It  is  no  more  for  the  interest  of  the  public  to  make  railroads 
unprofitable  than  to  make  business  generally  unprofitable. 
.  Perhaps  the  best  evidence  that  the  local  rates  of  railroads  through- 
out the  country  are  reasonable  is  to  be  found  in  the  prosperity  of  local 
points  all  over  'the  country,  and  by  comparison  with  railroad  charges 
elsewhere  in  the  world.  It  has  sometimes  been  assumed  that  competi- 
tion does  not  exist  at  what  are  called  "  local  points,"  but  this  is  not 
true.  The  desire  of  a  given  railroad  to  increase  the  volume  of  business, 
and  to  promote  the  prosperity  of  the  country  upon  which  it  depends  and 
must  always  depend  for  its  support,  as  against  sometimes  quite  far  distant 
regions  served  by  other  railroads,  tributary  to  the  same  or  competing 
markets,  constitutes  positive  and  active  competition.  The  rates  be- 
tween local  points  on  the  line  of  a  road  in  northern  or  central  Iowa  and 
the  markets  of  Chicago  and  Saint  Louis,  influence  the  rates  between 
local  points  on  a  road  in  Southern  Iowa  and  those  markets,  and  vice 
rtftta.  Again,  between  two  railroads,  even  if  they  are  a  considerable 
distance  apart,  there  is,  about  half  way,  a  belt  of  country,  the  inhabit- 
ants of  which  can  generally  go  to  either  road  :  and  the  contest  between 
the  railroads  to  secure  the  business  of  that  belt  influences  the  prices  of 
transportation  not  only  on  that  particular  traffic,  but  also  on  other 
business  which  is  transacted  at  the-  same  stations  on  the  respective 
roads. 

Moreover,  railroads  are  fixtures  :  they  cannot  be  taken  up  and  carried 
away,  if,  by  unreasonable  charges,  they  depress  the  industries  of  the 
region  through  which  they  pass.  Merchants  and  bankers,  stage-coaches 
and  steamboats,  are  frequently  so  situated  that  they  may  charge,  for  a 
considerable  time,  excessive  prices,  and  when  the  inevitable  punish- 
ment comes  by  the  loss  of  business  they  can  take  their  profits  and  go 
to  some  Other  market.  l>ut  railroads  have  no  such  refuge  ;  they  must 
remain  in  the  country  where  they  are  whatever  happens,  and  their 
punishment  for  excessive  charges,  while  it  would  be  a  little  slower  in 
coining  than  that  of  the  individual  merchant  or  stage-coach,  would  be 


216  INTERSTATE    COMMERCE. 

far  more  certain  and  severe,  because  their  business  would  be  ruined,  or 
other  roads  would  be  built  as  permanent  competitors. 

Nevertheless  it  is  true,  and  will  remain  true  so  long  as  railroads  are 
conducted  on  business  principles,  that  trade  centers  will  be  able  to 
obtain  lower  rates  of  transportation  than  local  points  for  precisely  the 
same  reason  that  such  trade  centers  are  able  to  obtain  .many  conveni- 
ences and  luxuries  which  local  points  do  not  and  cannot  enjoy.  Those 
who  desire  water  and  gas  in  their  houses,  or  many  and  cheap  amuse- 
ments, or  the  lowest  rates  of  freight,  must  go  to  where  there  are  enough 
other  persons  who  desire  the  same  to  make  it  profitable  to  supply  them. 
This  is  not  because  railroads  wish  it  to  be  so,  but  because  in  the  nature 
of  things  it  must  be  so.  It  is  manifestly  not  for  the  interest  of  any 
railroad  to  arbitrarily  drive  business  away  from  a  local  point  where  it 
carries  all  there  is  to  a  point  where  the  traffic  must  be  divided  with 
other  roads. 

It  has  been  said  that  railroads  make  the  trade  centers,  but  such  is 
not  the  fact.  The  tendency  of  railroads  is  to  put  different  trade  centers 
on  an  equality  by  the  annihilation  of  distance,  bift  they  no  more  make 
centers  of  population  and  trade  than  do  the  other  manufacturers  or  traders 
who  seek  such  points  for  their  own  profit.  Most  if  not  all  the  cases  of 
alleged  unreasonableness  in  railroad  charges  will,  on  careful  investiga- 
tion, be  found  to  be  due  to  a  misapprehension  or  misunderstanding  of 
the  facts.  The  experience  of  the  State  commissions  shows  this  to  be 
true. 

3.  Whether  publicity  of  rates  should  be  required  by  law ;  whether  changes  of  rates 
without  public  notice  should  be  prohibited,  and  the  best  method  of  securing  uniform- 
ity and  stability  of  rates?  • 

To  require  absolute  publicity  of  rates,  and  that  changes  should  not 
be  made  without  public  notice,  would  be  a  great  inconvenience  to  the 
business  community.  Eailroads  always  have  a  published  schedule  of 
rates,  just  as  many  manufacturers  have;  and  variations  from  the  pub- 
lished rates  are  always  downward  from  the  schedule,  and  in  the  interest 
of  the  shipper.  To  say  that  such  variations  should  not  be  made  with- 
out public  notice  would  be  to  interfere  with  business.  Practical  mer- 
chants and  shippers  understand  that  their  business  would  be  seriously 
interfered  with  if  they  were  required  to  wait  for  public  notice  to  be 
given  of  changes  in  rates,  which  might  be  of  the  greatest  immediate 
importance  to  them. 

It  is  not  possible  to  have  uniform  and  stable  rates  so  long  as  con- 
ditions and  circumstances  are  not  stable.  The  prices  which  may  be 
charged  for  the  carriage  from  one  place  to  another  of  merchandise  in- 
volve the  consideration  of  many  conditions  which  change  constantly. 
It  is  of  the  utmost  importance  to  the  public  that  the  parties  interested, 
the  railroads  and  the  shippers,  should  be  free  to  make  and  take  ad- 
vantage of  varying  rates  when  circumstances  make  variations  neces- 
sary. 

4.  The  advisability  of  establishing  a  system  of  maximum  and  minimum  rates  for 
the  transportation  of  interstate  commerce. 

What  has  been  said  in  answering  the  other  questions  would  seem  to 
sufficiently  answer  this  one.  No  system  of  maximum  and  minimum 
rates  for  the  transportation  of  marketable  commodities  is  practicable 
unless  the  maximum  and  minimum  are  respectively  higher  and  lower 
than  the  natural  rise  and  fall  of  prices,  and  of  course  such  maximum 
and  minimum  limits  would  be  of  no  effect  whatever. 


INTERSTATE  COMMERCE.  217 

5.  The  elements  of  cost,  the  condition  of  business,  and  the  other  factors  that  should 
be  considered  in  fixing  the  tariffs  on  interstate  traffic. 

THE   BASIS   OF   RAILROAD   RATES. 

It  is  easy  to  say  that  value  or  that  cost  is  the  essence' of  price,  but  let 
any  one  try  to  put  down  on  paper  au  exact  estimate  of  all  the  elements 
which  combine  to  fix  the  price  of  any  commodity  in  the  market,  and  he 
will  at  once  perceive  the  impossibility  of  weighing  with  accuracy  even 
the  elements  which  can  be  weighed,  to  say  nothing  of  the  influence  ot 
supply  and  demand  and  the  different  and  varying  judgments  of  men, 
the  nature  and  extent  of  which  are  wholly  intangible.  An  attempt  to 
base  rates  upon  the  cost  would  raise  many  perplexing  questions.  Cost 
on  one  railroad  might  be  less  than  cost  on  another,  and  might  largely 
exceed  cost  on  a  third.  It  would  be  obviously  impossible  to  take  the 
cost  of  each  particular  shipment,  and  we  should  then  be  driven  to  the 
average  cost.  It  would  be  equally  impossible  to  ascertain  the  average 
cost  at  any  particulal^ time  until  long  afterwards,  because  it  depends  so 
much  upon  the  weather  and  the  prices  of  labor  and  materials,  as  well  as 
upon  the  volume  of  business.  It  would  be  necessary,  therefore,  in  any 
such  attempt,  to  take  the  ascertained  average  cost  of  some  previous 
period,  including  in  cost,  of  course,  interest  at  some  established  rate 
upon  the  ascertained  cost  of  the  construction  and  equipment  of  the  rail- 
road. Assuming  that,  by  some  such  method,  the  cost  to  the  railroad 
of  transporting  100  pounds  a  given  distance  during  some  previous 
period  bad  been  ascertained  and  adopted  as  the  cost  for  the  period 
under  consideration,  how  could  this  cost  be  applied  to  the  traffic?  It 
is  clear  that  a  charge  per  hundred  pounds  per  mile  which  would  be  rea- 
sonable .enough  on  dry  goods,  boots  and  shoes,  drugs,  tea,  coffee,  and 
sugar  might  absolutely  prohibit  the  transportation  of  the  great  staples 
like  corn,  lumber,  coal,  and  iron.  To  apply  to  all  commodities  alike, 
therefore,  a  charge  based  upon  the  ascertained  average  cost  to  the  rail- 
road company,  it  is  easy  to  see,  would  not  facilitate  commerce.  As  a 
matter  of  fact,  if  you  leave  out  the  cost  of  loading  and  unloading  and 
of  insurance,  it  costs  the  railroad  no  more  to  carry  a  car-load  of  gold  or 
of  high  priced  merchandise  than  a  car  of  corn  ;  but  nobody  would  think 
of  asking  the  railroad  to  make  the  same  charge-  for  both  per  hundred 
pounds.  The  difficulty  of  basing  charges  beforehand  on  the  "  conditions 
of  business"  would  be  quite  as  great.  Who  would  be  the  judge  of  these 
conditions  of  business?  The  conditions  of  business  change  every  day 
and  every  hour,  and  charges  which  might  be  reasonable  to-day  might 
be  unreasonable  next  week  or  next  month. 

The  truth  is  that  the  price  of  railroad  transportation,  like  all  other 
prices,  adjusts  itself.  Those  who  have  transportation  for  sale  are 
brought  in  constant  daily  and  hourly  contact  with  those  who  wish  to 
buy  ;  and  the  Government,  to  successfully  establish  rates  of  transpor- 
tation, must  constitute  itself,  throvgh  its  agents,  the  general  freight 
department  of  every  railroad  in  the  United  States.  Then  imperfect 
agents  of  the  Government,  with  no  pecuniary  interest  at  stake,  would 
take  the  place  of  imperfect  agents  of  the  railroad  companies  who  are 
now  under  the  strongest  pressure  to  facilitate,  foster,  and  build  up 
trade  with  the  desire  to  make  the  roads- pay  a  profit  if  possible.  That 
railroads  do  not  and  cannot  fix  their  own  charges  is  shown  by  the  fact 
that  so  many  roads  have  failed  to  produce  any  adequate  return  upon 
the  capital  invested,  many  of  them  having  failed  to  make  any  return 
whatever  on  the  investment,  thus  showing  that  the  laws  of  trade  which 


218  INTERSTATE    COMMERCE. 

regulate  prices  generally  regulate  the  prices  of  railroad  transportation. 
If  managers  could  charge  what  they  pleased  all  railroads  would  be 
made  to  pay. 

(6)  Should  any  system  of  rebates  and  drawbacks  be  allowed  ?    If  so,  should  such 
transactions  be  regftlated  by  law  and  be  subject  to  official  inspection  or  approval  ? 
Or  should  they  be  entirely  prohibited  f 

THE   PAYMENT   OF   REBATES. 

Paying  rebates  and  drawbacks  is  simply  one  method  of  meeting  the 
market.  It  is  to  the  price  of  railroad  transportation  .what  a  commis- 
sion often  is  to  the  price  of  many  other  commodities  which  are  bought 
and  sold.  A  price  is  established  which  it  is  believed  can  be  maintained ; 
but  special  reasons  arise  why,  temporarily,  or  upon  some  particular 
shipment,  it  is  expedient  to  reduce  this  price.  To  refuse  such  reduc- 
tion might  involve  the  loss  of  business  to  the  shipper  and  to  the  rail- 
roads ;  but  at  the  same  time  it  might  be  highly  inexpedient  to  reduce 
generally  the  established  rate.  I  am  a\vare  that  it  is  alleged  that  re- 
bates and  drawbacks  are  sometimes  given  as  a  matter  of  favoritism  to 
build  up  one  individual  or  one  community  as  against  another  on  the 
same  line  of  railroad.  It  is  possible  that  there  may  be  instances  of 
this  character  in  the  country  ;  but  they  are  so  few,  if  they  exist  at  all,  as 
only  to  prove  the  rule  to  be  the  other  way.  It  would  be  folly  to  deny 
that  railroads  are  sometimes  badly  managed  and  sometimes  robbed  by 
their  managers ;  that  there  are  evils  connected  with  them  which  it  is 
desirable  to  lessen  or  do  away  with  if  we  can  without  incurring  others 
of  a  more  serious  character.  But  the  people  can  have  no  stronger  mo- 
tive  or  desire  than  the  owners  of  the  railroads  to  prevent  bad  manage- 
ment of  every  kind,  including  the  payment  of  rebates  or  drawbacks 
by  their  officers  as  a  mere  matter  of  favoritism.  ^ 

(7)  Should'  pooling  contracts  and  agreements  between  railroads  doing  an  interstate 
business  be  permitted,  or  should  they  be  entirely  prohibited  by  law?    If  they  should 
be  regulated  by  law,  would  it  be  sufficient  to  require  the  terms  of  such  agreements  to 
be  made  public,  and  subject  to  official  approval  ? 

POOLING  AGREEMENTS  JUSTIFIABLE. 

I  think  no  good  reason  exists  why  pooling  contracts  between  railroads 
should  be  prohibited  by  law,  nor  why  they  should  be  in  any  way  regu- 
lated by  law,  except  so  far  as  all  contracts  are  so  regulated.  A  pooling 
contract  is,  in  effect,  a  mere  agreement  between  rival  railroads  that  they 
will  not  permit  their  agents,  in  the  contest  for  business,  to  cut  rates  un- 
reasonably low.  Similar  agreements  are  made  by  manufacturers  and 
traders  in  commodities  of  all  kinds  all  over  the  world.  !No  such  agree- 
ment can  fix  the  price  absolutely,  because  that  is  fixed  by  laws  beyond 
the  control  of  any  such  combination.  It  can  merely  regulate  and  pre- 
vent that  extreme  competition  which  sometimes  occurs  in  all  lines  of 
trade,  and  which  is,  in  some  respects,  more  difficult  of  regulation  among 
railroads  than  in  any  other  branch  of  business.  Much  of  the  detail  of 
a  railroad  must  necessarily  be  managed  by  agents,  and  cannot  bo  di- 
rectly under  the  eye  of  the  owner,  or  even  of  the  principal  manager. 
Such  agents  must  necessarily  "be  trusted  with  power  to  meet  competi- 
tion ;  and  their  zeal  creates  a  tendency  to  cut  prices,  sometimes  unneccs 
sarily. 

Eailroads  may  be  said  to  manufacture  a  commodity  for  sale,  namely, 
transportation.  Among  the  elements  which  enter  into  the  cost  of  that 


INTERSTATE    COMMERCE.  219 

commodity  to  the  railroad  is  that  of  interest  on  the  cost  of  construction 
and  equipment,  and  also  a  considerable  additional  element  of  fixed 
operating  expenses,  that  is  to  say,  expenses  which  are  independent  of 
the  volume  of  business.  These  fixed  elements  of  cost  are  expended  every 
day  and  every  hour  of  the  day,  whether  there  is  auy  •business  or  not; 
anil  when  railroad  agents  are  confronted,  with  the  question  whether  to 
mak-.>  a  certain  sale  of  their  commodity  at  a  very  low  price  or  not,  they 
frequently  leave  out,  in  estimating  the  approximate  or  probable  cost. 
these  elements  of  fixed  or  constant  charges.  It  is  to  prevent  this  ten- 
dency toward  extreme  competition  that  pools  are  formed ;  and,  in  so 
far  as  they  do  secure  uniformity  and  stability  of  rates,  they  are  a  benefit 
to  the  public  as  well  as  to  the  railroads.  It  is  neither  the  interest  of 
the  public  that  railroads  should  be  unprofitable,  nor  that  they  should, 
be  singled  out  for  any  special  protection  from  each  other.  They  should 
stand  on  precisely  the  same  ground  as  that  occupied  by  other  commer- 
cial ventures. 

• 

(8)  Should  provision  be  made  by  law  for  securing  to  shippers  the  right  to  select  the 
lint's  and  parts  of  lines  over  which  their  shipments  shall  bo  transported? 

It  is  the  law  that  freight  shipped  on  a  railroad  shall  be  sent  as  it  is 
consigned,  and  a  railroad  failing  to  so  send  it  is  liable  to  the  shipper  for 
any  damage  which  he  may  suffer  thereby.  It  is  frequently  desirable 
among  the  railroads  to  transfer  freight  from  one  to  another,  for  the  pur- 
pose of  equalizing  business  in  the  pools;  and  where  this  is  done  with- 
out inconvenience  or  damage  to  the  shipper,  there  would  seem  to  be  no 
good  reason  why  he  should  be  allowed  to  prevent  it.  If  he  is  damaged, 
he  has  his  remedy  now  under  the  law. 

(9)  By  what  method  can  a  uniform  system  of  rates  for  the  transportation  of  passen- 
gers and  freight  by  all  the  corporations  engaged  m  interstate  commerce  be  best  se- 
cured T 

A  uniform  system  of  rates  for  the  transportation  of  passengers  and 
freight  by  all  corporations  engaged  in  interstate  commerce  may  be  said 
to  exist  now.  Their  methods  are  substantially  the  same,  and  the  rates 
are  also  substantially  the  same  by  railroads  which  are  in  competition 
with  one  another.  It  is  impossible  to  have  uniform  rates  except  where 
the  circumstances  and  conditions  which  influence  rates  are  uniform. 

DISCRIMINATIONS  BECAUSE   OF  DISTANCE  AND   QUANTITY. 

(10)  Should  corporations  engaged  in  interstate  commerce  be  permitted  to  charge  a 
lower  proportionate  rate  for  a  long  than  for  a  short  haul?    Does  the  public  interest 
require  any  legislation  on  that  subject? 

(11)  Should  any  concessions  in  rates  be  allowed  to  large  shippers,  except  such  as 
represent  the  actual  (inference  in  the  expense  of  handling  large  shipments  over  small 
shipments,  and  should  .such  concessions  be  made  known  to  the  public  ? 

I  take  the  liberty  of  answering  these  questions  together. 

Distance  in  transportation  is  practically  the  same  as  quantity.  A 
less  rate  per  mile  for  1,000  miles  than  for  10  miles  is  substantially  the 
same  thing  as  a  less  rate  per  car  for  a  thousand  cars  than  for  ten  cars. 
^Nebraska  and  Kansas  cannot  send  corn  to  the  Eastern  and  European 
markets  at  the  same  rate  per  mile  Ohio  and  Indiana  can  afford  to  pay. 
<  'harging  a  lower  rate  for  a  long  haul  than  for  a  short  haul,  or  making 
concessions  to  large  shippers  as  against  small  shippers,  is  really  doing 
business  at  wholesale  instead  of  at  retail,  and  the  attempt  has  often  been 
made  to  show  that  it  is  unjust  discrimination.  All  trade  is  full  of  in- 
justice in  this  sense.  A  man  who  buys  anything  in  small  quantities 


220  INTERSTATE    COMMERCE. 

pays  more  than  one  whobuys  at  wholesale.  This  isnot  upjust discrimina- 
tion, but  simply  a  law  of  trade,  and  one  which,  while  it  may  sometimes 
seem  to  work  hardships  to  an  individual,  is.  on  the  whole,  beneficial  to 
mankind.  The  tendency  of  trade  is  toward  consolidation,  because  con- 
solidation means  greater  economy,  which  directly  benefits  the  consumer 
by  making  prices  lower. 

Railroads  are  traders.  They  produce  transportation  for  sale.  What 
is  expedient  in  trade  generally  is  expedient  in  the  transportation  trade. 
If  railroads  can  make  money  by  selling  transportation  at  wholesale,  as 
they  do  to  the  Post-Office  Department,  /or  example,  it  would  seem  ex- 
pedient that  they  should  do  so.  Wholesale  prices  are  usually  lower 
than  retail  prices,  partly  because  the  cost  of  production  is  less,  and 
partly  because  of  the  willingness  of  the  seller  to  accept  a  less  margin  of 
profit.  One  individual  is  often  both  a  wholesale  and  a  retail  dealer. 
So  of  railroads.  Railroad  transportation  is  a  commodity  which  is  bought 
and  sold  as  much  as  coal  is ;  and  to  say  that  it  should  never  be  dealt  in  ex- 
cept at  retail  prices,  or,  as  has  been  said,  that  one  thousand  cars  should 
never  be  shipped  at  a  less  rate  per  car  than  one  train  or  one  single  car, 
is  the  same  as  saying  that  coal  should  be  sold  as  cheaply  for  I  car- 
load as  by  the  cargo  making  100  car-loads.  It  is  wholly  a  question  of 
expediency,  to  be  answered  only  by  those  directly  interested.  To  do 
away  with  wholesale  trading  would  limit  distribution  and  consumption, 
and  would,  in  the  end,  hurt  the  small  consumer.  The  world  needs 
wholesale  traders  as  innch  as  it  needs  retail  traders.  Wholesale  prices, 
whether  of  transportation  or  other  commodities,  so  far  from  being  an 
unjust  discrimination,  are  of  the  greatest  benefit,  because  they  encour- 
age distribution  and  make  possible  the  carrying  of  large  local  stocks, 
thus  enabling  the  retail  traders  to  do  a  large  business  on  small  capital, 
which  means  a  small  profit  on  each  transaction. 

(12)  Should  corporations  engaged  in  interstate  commerce  be  required  to  adopt  a 
uniform  system  of  accounts  ? 

This  would  seem  to  be  a  matter  of  very  little  interest  to  the  public. 
I  can  see  no  good  reason  why  railroad  corporations  should  be  required 
to  adopt  a  uniform  system  of  accounts,  any  more  than  why  corporations 
and  individuals  engaged  in  other  branches  of  business  should  be  re- 
quired to  do  the  same  thing. 

(13)  Is  it  desirable  that  such  corporations  should  be  required  to  make  annual  reports 
to  the  Government  ?     If  so,  what  information  as  to  their  earnings,  expenses,  and  oper- 
ations should  such  reports  contain  ? 

I  am  unable  to  perceive  any  reason  why  railroad  companies  should  be 
required  to  make  annual  reports  to  the  Government,  any  more  than  any 
and  all  other  corporations. 

(14)  In  making  provision  for  securing  cheap  transportation,  is  it  not  important  that 
the  Government  should  develop  and  maintain  a  system  of  water  routes? 

The  system  of  free  railroad  construction  which  exists  in  most  of  our 
States  has  resulted  in  securing  to  the  people  the  cheapest  transportation 
in  the  world.  I  see  no  good  reason  why  the  Government  should  main- 
tain a  system  of  water  routes  other  than  those  provided  by  nature,  in 
order  to  force  the  railroads  down  still  more  in  their  charges.  If  expe- 
dient for  the  Government  to  engage  at  all  in  the  transportation  busi- 
ness, why  not  become  the  owner  of  the  railroads,  as  some  European 
Governments  now  are,  or,  carrying  the  experiment  still  further,  imitate 
the  communists  of  Paris,  and  go  into  business  generally  ? 


INTERSTATE    COMMERCE. 

(15)  In  what  manner  can  legislation  for  the  regulation  of  interstate  commerce  be  en- 
forced ?  Should  a  commission  or  other  special  tribunal  be  established  to  tarry  out  the 
provisions  of  any  law  Congress  may  euact.  ? 

I  see  no  reason  why  disputes  arising  in  the  business  of  transportation 
should  be  adjusted  by  a  special  tribunal.  Railroads  are  generally  owned 
by  persons  who  are,  equally  with  other  owners  of  property,  entitled  to 
that  protection  which  it  is  the  object  of  Government  to  secure.  To  con- 
stitute special  courts  to  adjudicate  railroad  questions  would  be  class 
legislation,  alike  dangerous  to  the  railroads  and  to  society.  It  would 
invite  the  active  influence  of  prejudices  on  both  sides,  in  trying  to  con- 
trol the  selection  and  the  action  of  the  judges,  and  would  weaken  that 
confidence  which,  for  the  good  of  society,  all  men  should  repose  in  the 
judicial  tribunals  of  the  country.  If  existing  courts  are  insufficient  to 
settle  the  disputes  which  come  before'  them,  why  not  add  to  or  enlarge 
them,  rather  than  create  any  of  a  special  character  for  transportation 
questions  ? 

Perhaps  commissioners  to  hear  complaints  and  report  upon  them,  but 
without  power  to  adjudicate  questions,  would  be  productive  of  good,  in 
tending,  as  has  been  the  case  with  some  State  commissions,  to  make  a 
better  understanding  between  the  people  and  the  transportation  com- 
panies, by  showing  how  very  little  there  is  in  fact  to  complain  about; 
and  it  might  do  no  harm  to  require  district  attorneys  of  the  United 
States  to  prosecute  railroads,  when  such  commissioners  certify  to  them 
that,  in  their  judgment,  individuals  or  communities  have  been  unjustly 
treated. 

THE   EXPEDIENCY   OF   FIXING   CHARGES  BY  LAW. 

,  Whether  it  is  expedient  to  fix  railroad  charges  by  law  presents  very 
much  the  same  question  as  whether  it  is  expedient  to  fix  prices  gener- 
ally by  that  method.  The  prices  of  wheat,  and  iron,  and  cotton  vary 
constantly,  and  such  variations  make  it  common  for  one  individual  to 
obtain  advantage  over  another.  The  man  who  buys,  whether  for  his 
own  consumption  or  to  sell  again,  just  before  a  rise  in  price,  is  better 
off  than  he  who  buys  just  before  a  decline.  Individuals  are  sometimes 
ruined  by  a  sudden  fall  in  the  market  value  or  price  of  that  which  they 
have  bought,  believing  the  price  would  advance.  It  might  be  argued, 
with  some  force,  that  these  variations  in  prices  give  advantages  to  in- 
dividuals which  it  is  against  the  best  interests  of  society  to  have  pos- 
sessed by  anybody ;  that  it  would,  on  the  whole,  be  better  if  all  prices 
were  more  stable  and  uniform,  so  that  certain  individuals  could  not, 
either  by  good  fortune  or  good  judgment,  make  money  out  of  the  neces- 
sities of  others.  But  both  reason  and  experience  show  that  an  attempt 
on  the  part  of  society  to  fix  prices  by  law,  in  order  to  eliminate  at  least 
one  element  of  difference  in  the  conditions  of  men,  must  entail  greater 
evils ;  and  the  tendency  is,  and  has  been,  to  let  trade  regulate  its  own 
prices.  Certain  brunches  of  trade  in  cities  are  sometimes  an  exception ; 
but  because  the  inhabitants  of  a  small,  compact  community,  like  a 
city,  in  the  exercise  of  the  local  self  government  which  is  the  strength 
of  our  institutions,  may  wisely  ami  economically  combine  to  procure 
gas,  water,  horse-cars,  and  perhaps  other  conveniences,  granting  special 
privileges  in  the  streets,  which  are  limited  in  number  and  extent,  and 
limiting  prices  in  consideration  of  such  privileges,  it  does  not  follow 
that  it  would  be  either  wise  or  economical  for  the  State  or  the  General 
Government  to  attempt  the  exercise  of  a  similar  function  for  society  in 
general.  The  source  of  power  is  too  far  away  to  prevent  abuse;  and 


222  INTERSTATE    COMMERCE. 

the  local  interests  and  necessities  of  different  communities  and  differ- 
ent parts  of  the  country  are  not  the  same. 

The  inhabitants  of  a  city  can  hold  their  agents  directly  responsible, 
and  are  capable  of  judging  what  they  want  of  gas  and  water  and  horse- 
car  facilities,  and  of  contracting  with  responsible  persons  to  provide  them. 
As  a  rule,  the  market  for  such  things  in  a  city  can  be  ascertained  be- 
forehand with  considerable  accuracy,  and,  practically,  those  who  under- 
take to  supply  them  are  not  only  guaranteed  a  certain  market,  but  also 
certain  prices,  which  prices  are  usually  maintained  until  it  becomes 
clear  that  they  can  be  changed  without  injury  to  vested  interests. 
Capital,  therefore,  is  generally  ready  to  embark  in  such  undertakings. 
The  risk  is  small,  compared  with  the  chance  of  profit.  So  a  city  may 
regulate  the  fares  of  hacks  and  the  price  of  drayage.  The  capital  in- 
vested is  not  fixed,  and  may,  if  the  prices  are  not  remunerative,  or  if 
the  supply  exceeds  the  demand,  be  turned  in  other  directions — horses 
and  vehicles  can  be  used  in  other  ways  and  places.  Moreover,  while 
those  commodities  and  conveniences  which  the  inhabitants  of  cities  ob- 
tain by  the  exercise  of  their  corporate  function  are  generally  sold  at  re- 
tail to  individual  consumers  who  do  not  buy  to  sell  again,  neverthe- 
less, where  such  things  do  enter  into  business,  as,  for  example,  where 
gas  and  water  are  used  in  stores  and  factories,  and  are  thus,  in  effect, 
sold  again  in  the  prices  of  goods,  they  are  not  only  generally  sold  at 
wholesale  rates,  but  they  constitute  so  small  an  element  in  these  prices 
as  to  be  of  little  or  no  consequence.  But  the  transportation  by  rail  of 
commodities  which  are  bought  and  sold  presents  a  very  different  prob- 
lem. The  element  of  transportation  necessarily  makes  a  considerable 
part  of  the  price  to  the  consumer  of  many  of  the  great  staples,  and  the 
prices  which  can  be  charged  for  transportation  of  commodities  like  beef, 
corn,  iron,  coal,  and  lumber,  and  hundreds  of  other  things,  must  vary 
as  markets  vary. 

It  is  expedient,  therefore,  that  shippers  and  carriers  should  be  left 
free  to  make  their  own  bargains ;  that  society  should  treat  railroad 
transportation  as  commerce,  and  let  prices  alone.  It  is  wholly  a  qnes 
tion  of  social  expediency,  and  not  a  question  of  moral  or  legal  right. 
The  right  to  regulate  the  charges  of  railroads,  both  directly  by  fixing 
them  and  indirectly  by  limiting  the  construction  of  new  roads,  in  the 
absence  of  special  charters  to  the  contrary,  is  no  longer  disputed.  But 
to  argue  that  the  existence  of  the  right  establishes  the  wisdom  or  expe- 
diency of  exercising  it — of  attempting  to  regulate  railroad  prices — is  like 
arguing  that  the  right  to  make  usury  laws  constitutes  a  reason  why  it 
is  expedient  to  do  so.  Nobody  disputes  the  right,  but  commercial  peo- 
ple are  fast  removing  such  laws  from  their  statute-books,  because  ex- 
perience has  shown  them  to  be  not  only  useless  but  positively  harmful. 
Jt  is  sometimes  argued  that  railroad  building  is  not  left  to  take  care  of 
itself  according  to  natural  laws,  like  the  building  of  cotton  mills  and 
woolen  mills,  hotels  and  iron  furnaces;  that,  on  the  contrary,  society 
interferes  so  far  as  to  exercise  the  right  of  eminent  domain  in  their  be- 
half; that  this  makes  society  to  that  extent  a  partner  in  every  railroad 
enterprise;  that  the  individual  liberty  of  land-owners  is  invaded,  and 
that  all  of  these  considerations  constitute  a  reason  why,  even  if  it  is  not 
expedient  to  regulate  railroad  rates  by  direct  enactment  of  law,  it  is 
wise  and  proper  to  regulate  construction  to  the  extent,  at  least,  of  lim- 
iting the  right  of  eminent  domain  to  such  roads  only  as  society  thinks 
are  needed.  Unnecessary  roads  benefit  nobody,  while  they  involve  loss 
to  some  and  annoyance  to  others. 


INTERSTATE    COMMERCE.  223 

As  a  statement  of  what  society  has  a  right  to  do  this  is  unanswerable, 
but  it  does  not  touch  the  question  of  what  is  expedient,  of  what  is  wise, 
of  what  society  ic<in1x  to  do.  If  the  individual  liberty  of  land-owners  is 
invaded,  it  is  because  the  paramount  interests  of  society  require  railroad 
building-  to  be  encouraged ;  and  there  may  now  and  then  be  cases  where 
the  money  damages  which  railroads  are  obliged  to  pay,  and  which  are 
generally  pretty  high,  cannot  fully  compensate  the  invaded  individual, 
although,  as  a  rule,  the  reverse  is  true.  But  exercising  the  right  of 
eminent  domain  for  railroads,  when  it  is  open  to  all  who  wish  to  embark 
in  such  undertakings,  is  no  more  an  interference  with  natural  laws  of 
commerce  than  is  blasting  rocks  out  of  the  bottom  of  a  river.  Society 
in  both  cases  removes  an  obstruction- to  commerce,  but  nothing  more. 
It  is  only  when  one  man  or  set  of  men  may  enjoy  the  benefits  of  such 
removal,  and  another  man  or  set  of  men  may  not,  that  it  becomes  an 
interference  with  the  natural  laws  of  trade.  So  long  as  the  right  of 
eminent  domain  is  given  to  all  alike,  or  withheld  from  all  alike,  railroad 
building  is  regulated  by  the  same  natural  laws  which  regulate  the  build- 
ing of  cotton  mills  and  hotels.  Society  wants  cheap  transportation,  and 
the  most  certain  way  to  obtain  it  is  to  put  railroads  on  the  same  com- 
mercial basis  thet  has  been  found  by  experience  to  cheapen  everything 
else,  that  is,  the  basis  of  freedom.  If  you  limit  construction  it  will  be 
more  or  less  necessary  for  society  to  interfere  directly  with  the  price  of 
transportation,  which,  on  the  whole,  it  is  not  best  to  attempt,  because 
reasonable  prices  can  only  be  produced  by  natural  adjustment ;  while, 
on  the  other  hand,  if  you  attempt  to  fix  prices  by  law,  without  limiting 
construction,  it  will  not  be  regarded  as  reasonable  by  private  investors; 
and  the  tendency  will  be  to  drive  railroad  property  into  the  hands  of 
speculators,  and  to  impair  its  efficiency  and  usefulness.  Let  competition 
and  the  fear  of  competition,  direct  and  indirect,  regulate  the  prices.  To 
accomplish  this  the  right  to  build  must  be  free;  and  if  the  right  of  emi- 
nent domain  is  necessary,  that  also  must  be  free.  If  its  use  is  granted 
to  some  and  not  to  others,  if  existing  railroads  can  by  any  means  pre- 
vent new  roads  from  using  it,  certain  of  the  influences  which  should 
help  to  make  cheap  rates  are  weakened,  if  not  destroyed.  The  fear  of 
new  roads,  for  example,  which,  when  built,  must  always  remain  to  share 
the  business,  is  a  powerful  inducement  to  railroads  to  satisfy  their  cus- 
tomers, and  the  economy  of  management  and  operation  which  that  fear 
teaches  is  one  of  the  means  by  which  they  are  enabled  to  do  so.  When 
the  right  to  invoke  the  power  of  eminent  domain  is  offered  to  all  who 
wish  to  build  railroads,  society  has  done  all  it  wisely  can  do  to  encourage 
railroad  building  and  to  cheapen  transportation,  and  any  direct  regu- 
lation of  rates  will  be  found  to  be  unnecessary.  On  the  other  hand,  if 
the  right  to  invoke  this  power  is  not  general,  but  special,  it  not  only 
offers  opportunities  and  temptations  for  the  use  of  improper  influences, 
but  because  it  weakens  or  destroys  the  fear  of  rivals  it  also  tends  to 
make  necessary  an  attempt  at  direct  regulation  of  prices  on  existing 
roads,  with  all  the  evil  consequences  sure  to  follow. 

THE   RAILEOADS   CANNOT   CONTROL   THEIR  RATES. 

A. careful  examination  of  all  the  facts  will,  I  believe,  convince  your 
comnrittee  that,  wha-tever  may  be  the  legal  relation  of  railroads  to  the 
public,  their  owners  and  managers  have  no  more  actual  power  over  the 
rates  which  can  be  charged  and  collected  than  the  merchant  or  manu- 
facturer has  over  his  charges,  and  that  their  regulation  by  law  is  no  more 


224  INTERSTATE   COMMERCE. 

necessary.  Every  merchant  or  manufacturer  may,  in  one  sense,  fix  his 
own  price,  but  practically  it  is  fixed  for  him  by  what  he  can  get  and 
continue  to  get.  To  prosper  he  must  attract,  and  not  drive  away,  busi- 
ness. Various  trade  associations  meet  regularly  to  arrange  the  prices 
of  what  they  trade  in,  of  iron,  agricultural  machinery,  and  hundreds  of 
articles  of  necessity  to  somebody,  often  agreeing  to  limit  production, 
which  railroads  in  operation  cannot  do.  But  these  associations  have, 
after  all,  very  little  actual  power  over  prices,  and  if  the  influences  which 
regulate  railroads  are  not  always  precisely  the  same,  they  are  equally 
powerful.  A  railroad  is  absolutely  dependent  on  the  single  market 
where  it  is  for  the  sale  of  what  it  produces,  and  to  depress  trade  or  in- 
vite the  building  of  new  roads-  by  excessive  charges  would  injure  it 
permanently.  It  can  take  no  chances,  and  experience  shows  that  the 
tendency  of  railroads  is  to  make  rates  unnecessarily  low,  even  at  the  local 
points.  If  there  is  a  doubt,  it  is  almost  invariably  resolved  in  favor  of 
the  public. 

A  considerable  part  of  the  public  feeling  against  railroads,  for  it 
seems  proper  to  call  it  that,  is,  without  doubt,  due  to  the  misconception 
of  what  the  use  of  the  right  of  eminent  domain  means.  It  has  been 
looked  upon  as  a  special  privilege  rather  than  as  simply  the  removal  of 
an  obstruction  from  the  channels  of  commerce,  of  which  all  who  desire 
can  take  advantage;  and,  besides  this,  there  has  been  the  impression 
that  the  natural  laws  of  trade,  or,  in  other  words,  the  laws  of  supply 
and  demand,  do  not  operate  upon  railroads.  But  another  cause  of  ex- 
isting prejudice  is  the  impression,  which  is  more  or  less  general,  that 
railroad  investments  have  been  exceptionally  profitable.  Profits  made 
by  speculators  on  the  stock  exchanges  are  often  credited  by  the  people 
to  the  supposed  ability  of  railroad  managers  to  make  all  the  money 
they  want  out  of  the  people  who  use  the  roads.  Certainly  nothing  could 
be  further  from  the  truth  than  such  a  belief  as  this,  to  prove  which  it 
is  only  necessary  to  show,  what  is  true,  that  a  considerable  part  of  the 
profit  which  inures  to  gamblers  in  Wall  street  is  made  by  dealing  in 
the  stock  and  bonds  of  railroads  which  have  never  earned  even  a  mod- 
erate rate  of  interest  on  the  cost  of  their  construction.  The  great  fort- 
unes which  it  is  fashionable  to  ascribe  to  high  rates  of  transportation 
have  been,  to  a  considerable  extent,  made  out  of  other  speculators,  and 
out  of  the  foolish  lambs  who  have  risked  their  savings  with  the  hope 
of  making  money  rapidly  by  speculation.  Notwithstanding  the  truth 
of  this  statement,  however,  there  have  been  enough  really  profitable 
roads — roads  which  have  shared  in  the  growth  of  the  country  and  the 
increasing  value  of  land,  largely  due  to  their  existence — to  give  color 
to  the  other  opinion,  and  also  to  tempt  capital  constantly  into  new  roads, 
just  as  in  mining  one  success  will  sometimes  tempt  more  money  into 
poor  or  valueless  mines  than  comes  out  of  the  good  ones. 

Another  fallacy  due  to  the  speculation  in  railroad  securities  and 
mistaken  notions  about  railroad  charges  is  the  prevailing  belief  that 
watering  the  stock  of  a  railroad  corporation  increases  the  price  of  trans- 
portation to  the  public,  as  if  railroad  managers  had  only  to  make 
an  occasional  calculation  of  the  amount  of  revenue  they  wish  to  produce 
to  pay  dividends  on  watered  capital,  and  adjust  their  tariffs  accordingly! 
If  this  were  true,  of  course  all  railroads  would  be  profitable  ventures, 
but,  unfortunately  for  their  owners,  the  facts  do  not  sustain  so  fanciful 
a  theory.  If  railroad  corporations  could*base  their  charges  on  the  cost 
of  their  property,  so  that  the  question  of  reasonableness  could  be 
determined  by  that  measure,  the  question  of  cost  might  be  of  some  con- 


INTERSTATE   COMMERCE.  225 

sequence  to  the  public.  But  if  investors  have  no  such  guarantee,  if,  in 
practice,  a  railroad  over  the  Alleghany  Mountains  is  notable  to  charge 
and  collect  any  higher  prices  for  transportation  than  a  railroad  in  the 
valley  of  the  Mohawk,  then  the  question  of  what  a  road  has  really  cost, 
or  the  amount  of  stock  and  bonds  issued  to  represent  it,  is  of  no  more 
consequence  to  society  than  the  cost  of  hotels  and  cotton  mills,  or  the 
manner  in  which  their  ownership  is  represented.  No  increase  or 
decrease  of  the  number  of  shares  into  which  the  property  is  divided  can 
affect  the  earning  power  of  a  railroad,  a  hotel,  or  a  cotton  mill,  a  fact  so 
obvious  that  it  would  seem  unnecessary  to  state  it,  if  we  did  not  know 
how  common  it  is  to  find  intelligent  persons  who  believe  otherwise.  But 
leaders  of  public  opinion  have  been  known  to  take  ground,  not  only 
against  the  watering  of  stock,  which  can  hurt  nobody  excepting  those 
who  buy  it,  but  also  against  issuing  new  stock  to  represent  real  increase 
of  value.  If  watered  stock  is  sold  above  its  value  by  false  pretenses, 
the  courts  will  pursue  those  who  are  guilty,  just  as  all  crime  is,  or  should 
be,  punished,  but  it  is  no  part  of  government  to  attempt  to  fix  values, 
to  say  how  much  an  individual  or  a  corporation  may  call  his  or  its 
property  worth,  or  to  protect  investors  against  their  own  blindness  and 
folly.  And  if  a  railroad  really  increases  in  value  by  the  growth  of 
business,  or  economy  of  management,  certainly  those  who  own  the  road 
are  as  much  the  owners  of  the  increase  as  are  the  owners  of  land  or 
property  of  any  other  kind  which  has  increased  in  value.  To  argue, 
therefore,  that  railroads  should  not  be  permitted  to  represent  any  actual 
increase  in  value  by  additional  shares  is  to  argue  in  favor  of  Unjust 
discrimination  by  law  against  this  class  of  investments.  Men  invest 
their  money  in  hazardous  enterprises  only  upon  the  condition  that,  as 
an  offset  to  the  possibility  of  loss,  they  shall  have  the  possibility  of 
profit;  and  any  serious  attempt  on  the  part  of  the  public  to  make  a  rule 
for  railroad  investments  different  from  that  which  governs  other  business 
will  necessarily  prevent  prudent  persons  from  selling  other  property 
and  building  railroads. 

THE  WISDOM  OF  LEGISLATION  DOUBTED. 

In  conclusion,  it  may  not  be  out  of  place  to  suggest  that,  considering 
the  development  of  the  whole  country,  the  low  rates  which  everywhere 
prevail,  and  the  facility  with  which  persons  and  property  are  now  trans- 
ported, the  wisdom  of  any  legislation  which  may  look  to  changing  the 
conditions  which  have  produced  results  on  the  whole  so  beneficial  may 
well  be  doubted.  The  problem  is  working  itself  out  more  rapidly  than 
could  have  been  thought  possible  twenty  years  ago;  and  the  cause  for 
wonder  is  not  that  railroads,  in  common  with  human  affairs  generally, 
arc  as  yet  imperfect,  but  that  they  have  been  able  to  make  as  much 
progress  as  they  have  made  in  cheapness  and  efficiency. 

The  real  Kailroad  Question  is  not  how  to  get  cheaper  transportation, 
because  it  is  now  very  cheap,  and  can  only  become  more  so  through  the 
operation  of  the  laws  of  supply  and  demand,  but  it  is,  rather,  how  to 
continue  to  get  railroads  built  by  private  capital;  and  perhaps  the  real 
danger  is  that  a  mistaken  public  opinion  and  policy  of  government, 
added  to  the  ordinary  risks  of  business,  may,  by  rendering  railroad 
property  unattractive,  tend  to  Qrive  it  out  of  the  hands  of  investors, 
first  into  the  control  of  the  speculators,  and  ultimately  into  that  of  the 
Government.  Among  the  evils  of  Government  ownership  and  control 
would  undoubtedly  be  higher  charges  and  increased  taxation. 

16232  AP 15 


226  INTERSTATE   COMMERCE. 


THE  SOUTHWESTERN  RAILWAY  ASSOCIATION. 

Statement  submitted  by  J.  W.  Midgley,  commissioner  of  the  Southwestern 
Railway  Association,  the  Pacific  Coast  Association,  and  the  Colorado- 
Utah  Association.* 

There  are  in  the  West  several  associations  of  railroads,  commonly 
known  as  pools.  Of  these,  the  Southwestern  Railway  Association  is  the 
largest  and  the  oldest.  It  commenced  in  September,  1876,  and,  there- 
fore, antedated  the  Trunk  Line  Association  five  or  six  months.  The 
other  Western  compacts  have  been  modeled  largely  alter  the  South- 
western, hence  a  sketch  of  the  latter  would  be  fairly  descriptive  of  all. 

It  is,  of  course,  understood  that  the  word  "pool,"  as  applied  to  rail- 
way compacts,  is  a  misnomer.  The  term  properly  designates  a  game, 
the  winner  of  which  takes  all  the  contributions ;  whereas  a  railroad 
pool  is  a  device  to  insure  the  distribution  among  all  the  parties  thereto 
of  a  specified  tonnage  or  the  revenue  accruing  therefrom.  It  is  the  best 
method  yet  devised  to  secure  the  maintenance  of  eqijal  and  reasonable 
rates. 

The  Southwestern  Association  includes  all  freight  traffic  carried  over 
any  portion  of  the  roads  parties  to  it,  between  any  point  on  or  east  of 
the  Mississippi  and  the  cities  of  Saint  Joseph,  Atchison,  Leavenworth, 
and  Kansas  City,  or  the  junction  points  immediately  south  and  west  of 
the  last-named  city.  The  roads  belonging  to  the  association  are  :  the 
Chicago  and  Alton  ;  Chicago,  Burlington  and  Quincy ;  Chicago,  Rock 
Island  and  Pacific;  Hannibal  and  Saint  Joseph  ;  Kansas  City,  Saint 
Joseph  and  Council  Bluffs ;  Missouri  Pacific,  and  Wabash,  Saint  Louis 
and  Pacific.  Its  affairs  are  directed  by  a  board,  consisting  of  the 
managing  officer  of  each  of  the  roads  above  named.  Provision  is  made 
for  the  appointment  of  a  commissioner,  who  is  intrusted  with  the  en- 
forcement of  the  agreement. 

THE  PURPOSE   OF  THESE  ASSOCIATIONS. 

Aside  from  what  may  seem  to  be  the  selfish  object  of  securing  to  each 
road  its  fixed  percentage  of  tonnage,  the  interests  of  the  public  are  con- 
served by  the  maintenance  of  reasonable  rates,  which  are  intended  to 
be  alike  to  all.  Before  the  Southwestern  Association  was  formed  the 
several  roads  extending  from  Chicago  and  from  Saint  Louis  and  other 
Mississippi  River  points  to  Kansas  City,  Leavenworth,  Atchison,  and 
Saint  Joseph  indulged  in  frequent  struggles  for  the  competitive  traffic, 
the  inevitable  result  of  which  was  that  the  published  tariff'  was  disre- 
garded, and  special  or  contract  rates  became  the  rule.  Thus,  while  the 
tariff  from  Chicago  to  Kansas  City  on  the  first  four  classes  was  90,  70, 
50,  and  30  cents  per  100  pounds,  respectively,  large  shippers  had  con- 
tracts at  one-halt  the  rates  above  named,  while  a  few  secured  contracts 

*  The  roads  comprising  these  associations  are : 

Southwestern  Railway  Association. — Chicago  and  Alton  ;  Chicago,  Burlington  and 
Quiucy;  Chicago,  Rock  Island  and  Pacific ;  Hannibal  and  Saint  Joseph  ;  Kansas  City, 
Saint  Joseph  and  Council  Bluffs  ;  Missouri  Pacific  ;  Wabash,  Saint  Louis  and  Pacific. 

Colorado- Utah  Association. — Chicago  and  Alton;  Chicago,  Burlington  and  Quincy; 
Chicago,Milwankee  and  Saint  Paul ;  Chicago  and  Northwestern  ;  Chicago,  Rock  Island 
and  Pacific  ;  Chicago,  Saint  Paul,  Minneapolis  and  Omaha  ;  Hannibal  and  Saint  Jo- 
seph ;  Missouri  Pacific  ;  Wabash,  Saint  Louis  and  Pacific. 

Pacific  Coast  Association. — Chicago  and  Alton;  Chicago,  Burlington  and  Quiucy; 
Chicago,  Milwaukee  and  Saint  Paul  ;  Chicago  and  Northwestern  ;  Chicago,  Rook 
Island  and  Pacific;  Missouri  Pacific;  Wabash,  Saint  Louis  and  Pacific. 


INTERSTATE   'COMMERCE.  227 

at  even  less  than  the  rates  last  described.  For  example,  a  merchant 
might  think  he  had  done  well  to  secure  a  first-class  rate  of  45  cents  per 
ewt.  from  Chicago  to  Kansas  City,  and  30  cents  from  Saint  Lonis,  until 
he  learned,  incidentally,  that  his  rival  in  the  same  trade  had  obtained 
rates  10  cents  per  cwt.  lower  from  Chicago  and  Saint  Louis.  Such 
experiences  were  of  frequent  occurrence  so  long  as  each  road  was  at 
liberty  to  bid  for  the  business  without  restraint  from  any  general  au- 
thority. 

Primarily,  however,  it  will  be  admitted  that  the  compacts,  of  which 
the  Southwestern  is  an  example,  originated  with  the  idea  of  self-preser- 
vation. There  was  little  or  no  profit  in  the  business  at  the  rates  which 
were  current  when  each  road  was  a  law  unto  itself  as  to  the  manner  in 
which  the  traffic  should  be  conducted.  Under  such  circumstances  none 
but  the  unwary  paid  tariff  rates.  The  alert  shippers — and  the  large 
ones  came  under  that  head — were  shrewd  enough  to  work  one  road 
against  another,  exciting  their  jealousies  and  suspicions,  until  those 
having  freight  to  forward  were  able  to  name  the  price  at  which  it 
should  be  carried. 

Simple  agreements  to  maintain  rates  had  utterly  failed,  because  of 
the  lack  of  confidence  among  railway  men  as  to  the  good  faith  of  their 
rivals  or  associates.  It  remained,  therefore,  to  promote  honesty  in  op- 
erations by  removing  from  freight  agents  the  incentive  to  dishonesty. 
During  the  strifes  which  had  prevailed  no  road  had  obtained  all  the 
freight  to  and  from  common  points.  At  no  time  had  any  road  been  ex- 
cluded from  sharing  in  the  competitive  business.  The  remedy  proposed 
contemplated  that  each  road  should  be  accorded  such  a  percentage  of 
the  business  as  it  was  fair  to  presume  it  could  secure,  if  agreed  rates 
were  maintained  by  all  routes.  That  percentage  might  be  considerably 
less  than  the  officers  of  the  road  felt  they  were  entitled  to  receive.  Yet 
such  proportion,  at  tariff  rates,  would  yield  better  net  results  than 
would  the  larger  volume  at  nominal  or  fighting  figures. 

On  that  basis  the  pools  which  have  been  formed  stand,  and  in  case 
the  managers  cannot  agree  as  to  the  percentages  which  shall  govern 
resort  is  had  to  arbitration.  The  period  during  which  these  are  made 
to  run  is  seldom  less  than  one  year,  the  object  being  to  impart  to  the 
compact  the  element  of  permanency.  Furthermore,  it  is  believed  that 
when  the  roads  realize  that  they  cannot  by  any  devious  practice  exceed 
the  allotments  which  have  been  agreed  upon,  it  must  occur  to  them  that 
it  would  be  foolish  to  throw  away  revenue  by  cutting  the  established 
rates.  They  are  absolutely  sure  of  a  fixed  percentage  of  the  gross  rev- 
enue to  be  derived  from  the  competitive  business  included  in  the  pool. 
That  result  they  cannot  improve  upon  ;  hence  it  is  to  their  interest  to 
quietly  accept  the  conditions  marked  out  and  observe  the  agreement 
strictly. 

The  Southwestern  Association,  during  its  formative  period,  partook 
largely  of  the  character  of  a  deliberative  body,  i  It  held  monthly  ses 
sions,  at  which  rules  were  formulated  and  measures  adopted  for  tin- 
better  conduct  of  the  pool.  The  general  freight  agents  met  in  separate 
session,  and  agreed  as  to  the  changes  in  rates  and  classification  to  be 
recommended  to  the  managers.  Those  recommendations  the  managers 
approved,  amended,  or  rejected,  as  seemed  to  them  expedient.  In  such 
way  the  organization  assumed  shape,  whereupon  meetings  became  less 
frequent,  and  the  rates  on  the  principal  commodities  continued  un- 
changed. Shippers  became  accustomed  to  them,  and  requests  for 
changes  therein  are  comparatively  rare.  In  the  latter  instance  discre- 
tion rests  with  the ; commissioner,  to  act  for  the  association;  and  lest  the 
authority  thus  exercised  may  be  misunderstood,  it  should  be  explained. 


228  INTERSTATE    COMMERCE. 

THE  NECESSITY  FOR   SPECIAL,'  RATES. 

The  necessity  for  special  action  arises  in  a  variety  of  ways.  Compe- 
tition in  various  forms  is  not  removed  by  a  confederation  of  roads. 
There  is  too  much  navigable  water  in  this  country  to  permit  of  the  rail- 
roads becoming  extortionate ;  and  too  many  sections  are  able  to  supply 
the  wants  of  a  community  to  admit  of  any  combination  monopolizing 
the  transportation  to  a  given  territory.  Between  Saint  Louis  and  Kan- 
sas City  steamboats  ply  with  more  or  less  regularity  on  the  Missouri 
Eiver.  These  bid  for  i  he  coarser  articles,  in  the  carriage  of  which  time 
is  not  an  important  consideration.  Take,  for  example,  a  cargo  of  nails. 
Twenty  car  loads  are  brought  by  river  from  Wheeling,  and  are  stored 
at  East  Saint  Louis,  awaiting  favorable  rates  of  transportation  to  Kansas 
City.  The  boats  will  forward  them  at  10  cents  per  keg.  The  roads  are 
offered  them  at  an  advance  of  5  cents  per  100  pounds.  The  rate  named 
is,  perhaps,  3  cents  per  100  pounds  less  than  the  current  rate  on  like 
shipments  between  the  same  points  ;  but  is  any  shipper  injured  if  tbe 
commissioner,  in  the  interest  of  the  association,  authorizes  the  reduction 
in  order  to  secure  the  shipment  ?  If  he  does  not,  the  freight  will  be  lost 
to  the  roads,  in' which  event  neither  the  regular  shippers  nor  the  roads 
are  benefited.  Hence,  in  such  case,  he  should  have  authority  to  make 
the  reduction,  and  secure  the  business.  He  does  it  in  tbe  general  in- 
terest, for,  in  consideration  of  his  granting  the  special  rate,  the  right  is 
conveyed  to  designate  the  route  by  which  the  freight  shall  be  carried. 
If  each  road  were  at  liberty  to  do  as  it  chose,  they  would  all  strive  for 
the  business  against  the  boats,  and  the  outcome  would  be  a  decline  iu 
rates  until  neither  the  boats  nor  the  roads  would  profit  by  the  transac- 
tion. By  acting  through  the  association  such  demoralization  is  avoided, 
because  the  commissioner  represents  all  the  roads;  and,  as  he  can  have 
no  preference,  the  freight  thus  secured  is  used  as  an  equalizer  to  even 
the  percentages  of  the  members. 

THROUGH  BATES  BETWEEN   COMMON  POINTS  EQUALIZED. 

The  through  rates  to  and  from  common  points  are  equalized,  i.  e., 
are  made  the  same  via  the  several  gateways  or  cities.  To  illustrate: 
Pittsburgh  is  a  center  from  which  articles  that  are  manufactured  are 
distributed  throughout  the  West.  Eates  of  transportation  from  Pitts- 
burgh to  Saint  Louis  are  largely  affected  by  what  the  Ohio  Eiver  boats 
charge.  In  order,  therefore,  to  secure  uniformity  in  the  through  rates, 
it  is  agreed  that  the  roads  on  which  the  business  originates  in  the  Ohio 
v^lley  shall  make,  to  any  point  on  the  Mississippi  Eiver  north  of  Saint 
Louis,  whatever  rate  they  believe  is  current  from  Pittsburgh  to  Saint 
Louis.  This  they  can  do  via  Chicago  or  either  one  of  the  gateways  to 
the  Mississippi.  Then,  as  the  rates  are  arbitrary  and  alike  from  all 
points  on  the  Mississippi  Eiver  to  all  points  on  the  Missouri  Eiver  south 
of  and  including  Omaha,  the  through  rate  is  thereby  made  the  same  via 
the  several  routes.  So,  also,  on  e:istbound  business.  The  rate  on  corn 
from  Kansas  City  to  Saint  Louis  is  15  cents  per  100  pounds ;  thence  to 
"NTew  York  it  is  23  cents,  while  from  Chicago  it  is  16  per  cent,  less,  that 
is,  20  cents.  Now,  in  order  to  enable  the  shipper  to  forward  his  grain 
*?ia  Saint  Louis,  Hannibal,  or  Chicago  at  pleasure,  the  rate  on  such 
ousiness  is  made  3  cents  higher  from  Kansas  City  to  Chicago  than  to 
Saint  Louis,  thus  making  a  through  rate  of  43  cents  per  100  pounds  by 
whatever  route  the  business  may  be  carried.  If  these  conditions  are 
maintained,  manifestly  there  can  be  no  discrimination  against  any  ship- 


INTERSTATE    COMMERCE.  229 

per.  In  fact,  such  complaints  arise  because  all  the  business  is  not 
pooled.  Usually  parties  who  call  for  "protection,"  as  it  is  termed, 
against  less  than  tariff  obtained  by  their  competitors  refer  to  rates 
secured  by  outside  or  non-pooled  lines.  Thus,  the  complaints  which  pro- 
ceeded from  Chicago  so  loudly  early  this  year  because  of  the  discrimina- 
tion in  grain  rates  against  this  city  grew  out  of  the  fact  that,  while  the 
business  forwarded  from  Saint  Louis,  Peoria,  and  Chicago  to  the  East 
was  comprised  in  separate  pools  from  those  cities,  there  were  a  nuurber 
of  intermediate  gateways  through  which  grain  could  be  and  was  carried, 
and,  when  so  forwarded,  it  was  not  amenable  to  any  restrictions  or  pool- 
ing obligations.  Those  conditions  impelled  the  shipping  public  to  de- 
mand that  all  or  else  none  be  pooled.  If  none  is  pooled,  then  the  con- 
test for  the  business  degenerates  into  a  scramble,  during  which  favor- 
itism is  shown  a  few  large  dealers,  while  the  others  fare  indifferently. 
Ordinarily  shippers  profess  to  care  hut  little  what  rates  are  charged, 
provided  they  are  alike  to  all ;  but  the  temptation  to  work  for  a  better 
rate  than  any  one  else  has  is  not  always  overcome. 

THE   BUSINESS  OF   THE   SOUTHWESTERN   ASSOCIATION. 

The  greater  portion  of  the  business  carried  by  the  Southwestern  As- 
sociation is  what  may  be  termed  local,  i.  c.,  it  originates  at  or  is  des- 
tined to  Saint  Louis,  or  other  Mississippi  Eiver  points,  or  Chicago,  as 
the  case  may  be.  Next  in  magnitude  is  the  business  which  originates 
at  or  is  destined  to  the  Middle  States, i.  e.,  the  territory  east  of  Chicago 
and  west  of  and  including  Buffalo,  Pittsburgh,  and  Pa rkersburg,  while 
the  amount  of  traffic  which  originates  in  the  territory  known  as  the  At- 
lantic seaboard  is  much  smaller  than  is  generally  supposed.  Of  the 
aggregate  tonnage  carried  westward  by  the  Southwestern  lines  during 
the  year  1884, 11.8  per  cent,  originated  east  of  Buffalo,  Pittsburgh,  and 
Parkersburg  ;  28.3  per  cent,  originated  in  the  Middle  States ;  46.8  per 
cent,  originated  at  Chicago  and  Mississippi  River  points,  and  13.1  per 
cent,  originated  at  interior  points  between  Chicago  and  the  Mississippi 
River.  The  total  amount  carried  for  the  year  was,  westward,  1,269,599 
tons,  and  eastward,  1,738,817  tons.  Of  the  westbound  tonnage,  the 
largest  item  was  586,372  tons  of  lumber,  while  of  the  eastward  move- 
ment 71.8  per  cent,  consisted  of  grain  and  17.2  per  cent,  of  live  stock. 

PROPORTIONS  OF  INTER- STATE   TRAFFIC. 

Inquiry  will  perhaps  be  made  as  to  how  much  business  carried  by 
rail  is  inter-State.  If  interrogatories  were  addressed  to  the  several 
roads  participating  in  the  transportation,  with  the  view  of  compiling 
such  data,  a  confused  report  would  be  made.  For  example,  take  the 
case  of  20  tons  of  sugar  shipped  from  Boston  to  Kansas  City.  It  passes, 
let  us  say,  by  the  Fitchburg  road  and  the  Hoosac  Tunnel,  thence 
via  the  Troy  and  Boston  Railroad  to  a  connection  with  the  New  York, 
West  Shore  and  Buffalo  Railroad,  thence  via  the  Grand  Trunk  Railway 
to  Chicago,  thence  via  the  Chicago,  Burlington  and  Quincy  Railroad  to 
Quincy,  and  thence  via  the  Hannibal  and  Saint  Joseph  Railroad  to  Kan- 
sas City.  Six  roads  would  participate  in  the  transportation  between 
Boston  and  Kansas  City.  Yet,  if  required  to  render  a  statement  of 
their  inter-State  commerce,  each  road  would  report  the  20  tons;  that 
is  to  say,  this  particular  shipment  would  be  reported  six  times,  to 
the  confusion  of  whatever  officer  would  attempt  to  make  a  showing  of 
the  actual  volume  of  inter-State  commerce.  A  report  by  roads  would 
therefore  be  of  little  avail  as  a  correct  index  of  the  movement. 


230  INTERSTATE    COMMERCE. 

POOLING  AGREEMENTS  NOT  MAINTAINED. 

Notwithstanding  it  is  to  the  immediate  interest  of  a  road  when  it  be- 
comes party  to  a  pool  to  adhere  strictly  to  the  agreement,  such  is  the 
weakness  of  human  nature,  under  the  blandishments  of  shippers,  that 
few  are  the  number  who  firmly  resist.  Soon  the  breach  of  faith  is  dis- 
covered, whereupon  confidence  is  destroyed,  and  with  difficulty  are  the 
oth.ers  restrained  from  making  reprisals.  If  the  violations  are  repeated 
protective  measures  are  adopted,  and  the  agreed  rates  cease  to  be  re- 
garded. This  has  been  the  mortifying  experience  of  all  compacts,  thus 
compelling  the  admission  that  no  means  have  yet  been  devised  whereby 
an  absolute  maintenance  of  established  rates  can  be  assured.  Self  inter- 
est has  failed  to  effect  it ;  hence  compulsory  legislation  could  not  be 
relied  on  to  accomplish  it.  Yet,  despite  their  imperfections,  the  fact 
remains  that  the  pools  which  have  been  wisely  ordered  have  approx- 
imated the  desired  results,  whereas  all  other  forms  of  regulation  have 
failed. 

Paradoxical  though  it  may  seem,  the  strength  of  a  pool  constitutes 
its  weakness,  inasmuch  as  it  invites  attack.  If  the  parties  to  it  con- 
tinue to  work  harmoniously  and  achieve  good  results,  combinations  are 
formed  to  share  in  the  profits.  Circuitous  routes  are  opened,  to  be 
closed  for  a  consideration.  New  lines  are  projected,  none  of  which 
would  be  undertaken  were  the  business  included  in  the  compact  known 
to  be  unprofitable.  Hence  the  prosperity  of  a  pool  often  contributes  to 
its  injury. 

THE  DIVERSION  OF  FREIGHT. 

The  remaining  pooling  feature  to  be  considered  is  the  exercise  of  the 
power  to  divert  tonnage.  Although  it  is  a  matter  of  surprise  how 
nearly  the  percentages  of  traffic  which  should  be  accorded  the  several 
lines  can  be  approximated  by  agreement  or  by  arbitration,  yet,  in  order 
to  insure  to  each  road  its  fixed  allotment  of  the  tonnage  pooled,  it  is 
necessary  that  the  commissioner  should  have  authority  to  divert  freight 
from  one  road  to  another  to  equalize  the  percentage  of  the  road  which 
is  short.  This  authority,  unless  discreetly  exercised,  provokes  irrita- 
tion on  the  part  of  the  public.  Shippers  insist  upon  the  right  to  have 
their  business  carried  as  they  may  elect ;  and  they  are  disposed  to  re- 
sent arbitrary  interferences  with  their  wishes  in  that  respect.  To  over- 
come these  objections  on  their  part,  it  is  agreed  that  if  a  shipper  insists 
'upon  receiving  his  goods  at  the  depot  of  the  route  via  which  they  have 
been  consigned,  then  the  road  to  which  they  have  been  diverted  shall, 
on  arrival  of  the  goods  at  destination,  transfer  them  to  the  depot  which 
they  would  have  entered  had  no  diversion  been  made.  Each  compact 
also  has  under  its  control  a  large  class  of  freight  which  it  can  route  at 
discretion,  and  this  is  available  with  which  to  equalize.  For  example, 
the  associated  roads,  through  their  commissioner,  arrange  with  connect- 
ing lines  for  through  rates  and  divisions,  the  proportion  of  which  accru- 
ing to  the  roads  may  be  less  than  their  local  rates  from  such  receiving 
point.  This  lesser  proportion  they  accept  in  consideration  of  the  ex- 
pressly stipulated  right  to  route  business  thus  received  among  the  sev- 
eral associated  roads  as  the  commissioner  shall,  from  time  to  time,  direct. 
They  thus  undertake  to  become  forwarders,  in  addition  to  their  char- 
tered obligation  as  common  carriers,  in  consideration  of  the  right  to 
transport  the  business  in  question  at  convenience. 

Pools  may,  by  those  unacquainted  with  them,  be  criticized  unfavora- 
bly, but  it  is  noticeable  that,  notwithstanding  their  imperfections  and 


INTERSTATE    COMMERCE. 


231 


the  failures  which  have  marked  their  history,  whenever  the  railways, 
after  a  period  of  severe  strife  and  dire  disaster,  come  together  with  the 
view  of  adjusting  their  differences  and  maintaining  agreed  rates  in  the 
future,  resort  is  invariably  had  to  the  pooling  system  as  the  only  means 
whereby  the  desired  ends  can  be  attained.  Hence  it  is  that  they  have 
become  "  too  numerous  to  mention"  separately,  and  reference  by  title  can 
only  be  made  to  the  larger  compacts  now  in  existence  in  the  West. 
• 

OTHER  WESTERN   POOLS. 

Closely  allied  to  the  Southwestern  Association  in  the  form  of  its  gov- 
ernment is  the  Western  Freight  Association,  which  comprises  all  roads 
operating  between  Chicago,  Milwaukee  and  Saint  Louis  on  the  east, 
and  Omaha  and  Council  Bluffs  on  the  west. 

Operating  immediately  north  thereof  is  the  Northwestern  Traffic  As- 
sociation, which  comprises  all  roads  engaged  in  the  transportation  of 
freight  between  Chicago  and  Milwaukee,  on  the  one  hand,  and  Saint 
Paul,  Minneapolis  and  Minnesota  Transfer  on  the  other. 

Smaller  than  either  of  those  above  named,  is  tlie  Colorado-Utah  As- 
sociation, which  includes  all  roads  east  of  the  Missouri  River  and  west 
of  Chicago  and  Saint  Louis  (excepting  the  Saint  Louis  aud  San  Fran- 
cisco Railway),  that  carry  business  destined  to  or  originating  in  Colo- 
rado aud  Utah. 

In  line  with  the  last-named  association,  but  distinct  therefrom,  is  the 
Colorado  Railway  Association,  which  comprises  the  roads  west  of  the 
Missouri  River  engaged  in  the  transportation  of  freight  traffic  to  and 
from  competitive  points  in  Colorado. 

Then  there  is  the  Pacific  Coast  Association,  which  includes  all  roads 
east  of  the  Missouri  River  and  Saint  Paul,  and  west  of  Chicago,  Mil- 
waukee and  Saint  Louis  (excepting  the  Saint  Louis  and  San  Francisco 
Railway),  which  carry  business  destined  to  or  from  points  on  the  Pacific 
coast,  including  Oregon,  Washington  Territory,  and  British  Columbia. 

Immediately  west  of  this  compact,  and  fitting  into  it,  is  the  Trans- 
continental Association,  which  includes  all  roads  west  of  Saint  Paul, 
Omaha,  and  Kansas  City,  and  a  north  and  south  line  drawn  through 
the  two  last-named  cities  on  the  east,  and  the  Pacific  coast  on  the  west. 

All  the  compacts  named,  in  the  main  are  governed  by  rules  like  those 
adopted  for  the  guidance  of  the  Southwestern  Railway  Association. 


A  COMPLAINT  FROM  SPRINGFIELD,  ILL. 

Statement  submitted  by  merchants  of  Springfield,  111. 

We,  the  undersigned  merchants  and  shippers  of  Springfield,  111.,  ask 
that  legislation  by  Congress  may  be  had  to  remedy  complaints  now 
being  made  against  carrying  companies,  and  in  connection  therewith 
offer  the  following  thoughts.  We  believe  that  all  rates  from  the  sea- 
board should  be  based  upon  the  distance.  That  a  higher  rate  should 
not  be  charged  in  proportion  on  local  freights  than  is  charged  on 
through  rates.  For  instance  the  rates  through  are  as  follows,  in  cents 
per  hundred  pounds : 


First 
class. 

Second 
class. 

Third 
class. 

Fourth 

class. 

Special. 

Xew  York  to  Springfield  

68 

57 

44 

36 

27J 

Chicago  to  Springfield  

51 

40 

31 

25 

20 

232 


INTERSTATE    COMMERCE. 


The  distancffroin  New  York  to  Springfield  is  over  1,000  miles;  from 
Chicago  the  distance  is  185  miles.  We  believe  that  this  discrimination 
against  cities  in  this  State  might  be  remedied  with  profit  to  the  carry- 
ing companies  by  increasing  this  through  rate  to  all  points  in  the  State 
proportionately  to  the  distance  from  the  seaboard.  The  rates  having 
been  once  established^  and  public  notice  having  been  given  to  the  ship- 
pers, they  should  never  be  suddenly  changed,  and  then  only  after  notice — 
say,  of  ten  days.  We  believe  that  a  maximum  and  a  minimum  rate 
might  be  established  with  no  very  great  .disadvantage  to  small  ship- 
pers. We  feel  that  no  one  should  ask  that  rates  should  be  established 
so  low  as  to  yield  no  profit  to  the  carrier,  as  when  in  times  like  the  pres- 
ent nothing  can  be  gained  to  the  community  in  harshly  depressing  one 
branch  of  trade.  Drawbacks  and  rebates  of  every  kind  lead  to  false 
statements  many  times,  and,  we  think,  are  thoroughly  demoralizing  as 
a  remedy.  We  believe  after  it  is  once  acknowledged  that  rates  shall 
be  charged  in  proportion  to  distance,  that  rates  may  be  made  less  for 
full  cars  only  beyond  the  price  charged  for  less  quantity;  that  an  honest 
commission  can  protect  the  rights  of  shippers  in  every  other  particular. 
Discrimination  in  rates  to  different  points  in  this  State  would  then  be 
impossible,  and  each  city  would  be  placed  in  a  just  and  equitable  posi- 
tion with  neighboring  cities,  and  pooling  of  issues  and  division  of  profits 
would  then  be  unnecessary. 

Allow  us  to  offer  a  table  containing  the  rate  charged  Springfield 
and  other  points,  which  is  only  possible  under  the  pooling  system: 


From  New  York  to  — 

First 
class. 

Second 
class. 

Third 
class. 

Fourth 
class. 

Special. 

Chicago          

Cents. 
35 

Cents. 
26 

Cents. 
22 

Cents. 
16 

Cents. 
15 

Springfield  

68 

57 

44 

36 

274 

Peoria  and  Pokin  

45 

34 

28 

20 

17 

B'ootnington  ..  

45 

34 

28 

20 

17 

Alton  

47 

36 

30 

22 

19 

Joliet  

35 

26 

22 

16 

15 

[Signed  by  Thayer  &  Capps  (woolen  mills),  C.  A.  Gehrmann,  C.  W. 
Helinle,  Smith  &  Hay,  John  O.  Eames,  and  P.  Reisch  &  Bros.,  and 
dated  August  15, 1885.] 


A  COMPLAINT  FEOM  DANVILLE,  ILLINOIS. 

Letter  from  D.  Gregg,  of  Danville,  Illinois,  miller  and  dealer  in  grain. 

Allow  me  to  call  your  attention  to  the  fact  that  we  have  a  local  steal  or 
pool  in  this  place  by  which  we  are  taxed  6  cents  above  our  legitimate  rate 
east.  The  pool  is  formed  by  the  Wabash,  Chicago  and  Eastern  Illi- 
nois, and  Indiana,  Bloomington  and  Western  Eailroads.  They  divide 
this  steal,  as  we  term  it,  because  it  is  nothing  more  or  less.  On  what  is 
called  the  Fink  pool  we  are  entitled  to  a  Chicago  eastern  rate,  but  for 
over  two  years  we  are  taxed  6  cents  per  hundred  pounds  on  all  eastern 
shipments,  and  you  can  form  an  opinion  how  millers  and  grain  shippers 
can  compete  with  other  towns  of  less  importance  than  we  are,  who  have 
a  Chicago  rate.  Our  State  laws  do  not  reach  this  discrimination,  and 
we  can  only  look  to  your  committee  for  redress.  If  you  want  further  ev- 
idence of  discriminations,  would  refer  you  to  our  Business  Mens'  ASSO- 


INTERSTATE    COMMERCE.  233 

ciation  here.  Yon  are  aware  that  Danville  is  a  town  of  no  meau  pre- 
tensions. It  lias  a  reputation  for  energy  and  thrift  unsurpassed  by  few 
in  the  State  of  Illinois,  and  that  we  are  represented  by  live  men  in  the 
House  and  Senate  of  the  United  States,  and  that  in  order  that  their  rep- 
utation be  maintained  this  little  steal  needs  ventilation  and  correction 
at  the  earliest  date  possible,  as  this  territory  needs  all  that  is  due  them. 
Danville  Township  is  paying  interest  on  a  debt  of  one  quarterot  a  million 
dollars  given  these  same  railroads,  and  this  is  the  way  they  are  paying 
us  back.  We  are  at  a  loss  to  know  why  the  great  central  part  of  the 
State  of  Illinois  is  compelled  to  pay  tribute  to  Chicago,  Indianapolis, 
and  Toledo,  and  it  is  for  you  to  see  that  it  is  not  so. 


CHEAP  TRANSPORTATION. 

Statement  by  Joseph  Utley.  of  Dixon,  Illinois,  former  canal  commissioner 

of  Illinois. 

For  centuries  the  best,  the  wisest,  and  the  jfl'eatest  statesmen  have 
spent  anxious  days  and  sleepless  nights  in  devising  means  by  which 
they  could  facilitate  commerce  and  cheapen  transportation.  Xo  country 
in  the  wide  world  has  more  natural  advantages  to  secure  these  desired 
ends  than  the  Valley  of  the  Mississippi.  Its  fertile  soil  and  diversified 
climate,  its  teeming  millions  of  intelligent  and  industrious  people,  and 
its  natural  advantages  cannot  be  surpassed.  In  fact,  the  Great  En- 
gineer of  the  universe  has  plainly  marked  out  the  lines  for  commerce, 
and  left  but  little  for  the  hand  of  man  to  do  in  their  improvement.  The 
people  begin  to  realize  the  vast  importance  of  securing  cheaper  trans- 
portation, and  consequently  urge  upon  Congress  the  necessity  of  making 
such  improvements  in  our  natural  water-ways  as  will  insure  cheaper 
transportation  to  the  seaboard  and  the  markets  of  the  world  for  our 
vast  surplus  of  wheat  and  corn  and  provisions.  The  West  and  North- 
west  are  now  meeting  with  sharp  competition  for  our  cereals  in  Europe, 
as  is  amply  demonstrated  by  the  present  low  price*  for  our  products. 
Let  us  for  one  moment  inquire  into  the  causes  for  this  depression  in 
prices. 

Within  the  past  year  Germany  has  completed  a  ship-canal  from  the 
Baltic  to  the  North  Sea,  saving  500  miles  of  difficult  and  dangerous 
navigation  to  the  Atlantic  ports,  and  reducing  the  cost  of  transporting 
wheat  from  the  interior  5  or  G  cents  per  bushel.  Within  the  last  month 
the  German  Bundesrath  have  -unanimously  approved  a  bill  for  the  con- 
struction of  a  ship  canal  from  one  of  the  southern  bays  of  the  Baltic  Sea 
to  the  river  Elba  and  the  North  Sea,  at  a  cost  of  150,000,000  marks. 

Russia  has  just  completed  a  ship-canal  to  connect  with  the  Caspian 
Railway,  and  her  engineers  have  finished  the  surveys  for  the  improve- 
ment of  the  river  Volga  from  the  Caspian  Sea  up  that  river  to  a  pass 
in  the  highlands,  and  a  canal  through  that  pass  to  the  river  Don,  and 
down  that  river  to  the  Black  Sea,  and  out  to  the  ocean.  It  is  esti- 
mated that  this  improvement  alone  will  ivduce  the  cost  of  freight  on 
wheat  from  the  great  wheat  fields  about  the  Caspian  Sea  to  Atlantic 
ports  fully  7  cents  per  bushel.  Previous  to  the  construction  of  the  Suez 
Canal  the  East  Indies  exported  to  Europe  less  than  400,000  bushels  of 
wheat  annually.  In  1881'  they  sent  to  the  same  country  over  33,OOt»,U)0 
bushels.  Now,  in  my  judgment,  the  Congress  of  the  United  States 
ought  to  adopt  such  plans  for  the  improvement  of  our  natural  water- 
ways and  the  construction  of  inexpensive  canals  as  will  result  in  a  large 


234  INTERSTATE    COMMERCE. 

reduction  of  freight  charges  and  enable  us  to  meet  the  competition  of 
other  countries  in  the  markets  of  the  world. 

An  appropriation  of  a  portion  of  the  surplus  revenues  for  this  object, 
after  paying  the  necessary  expenses  of  the  Government,  would  in  a 
brief  space  of  time  accomplish  all  this  without  adding  one  penny  to  our 
present  taxes.  On  the  other  hand,  if  we  neglect  to  improve  the  oppor- 
tunities within  our  reach  and  allow  other  nations  to  supplant  ns-  in  the 
markets  of  Europe,  we  can  safely  predict  that  the  balance  of  trade  will 
be  against  us  and  commercical  prostration  and  financial  derangement 
will  surely  follow. 

It  is  true  that  the  country  is  covered  over  with  a  network  of  railroads, 
and  I  would  not  for  one  moment' undervalue  their  usefulness  in  devel- 
oping the  resources  of  the  country;  but  these  roads  are  in  the  hands  of 
private  corporations  and  cannot  be  relied  upon  to  transport  our  prod- 
ucts at  reasonable  rates.  The  lately  invented  pooling  arrangements 
made  by  the  leading  railway  managers  enable  their  pool  commissioners 
by  one  stroke  of  the  pen  to  take  millions  from  the  producers  of  the 
West  and  the  consumers  of  the  East.  Hence  the  necessity  of  some 
controlling  power.  Ana  what,  allow  me  to  ask,  will  be  so  effectual,  so 
lasting,  and  so  cheap  as  improved  rivers  and  artificial  canals  .' 

A  brief  statement  of  facts  will  prove  beyond  dispute  that  railways 
cannot  compete  in  the  carrying  of  freight  with  navigable  rivers  and 
properly  constructed  canals.  The  New  York  State  engineer's  report 
for  1880  (the  last  report  on  this  head)  states  that  the  average  actual 
cost  of  transporting  freight  on  the  New  York  Central,  the  great  four- 
track  railroad,  was  £.&  of  a  cent  per  ton  per  mile,  and  that,  too,  without 
one  penny  for  capital  invested,  and  the  average  charge  was  -f^o  OI>  one 
cent  per  ton  per  mile.  During  the  past  autumn  the  charge  for  trans- 
portating  wheat  from  Buffalo  to  New  York  via  the  Erie  Canal  and  Hud- 
son Eiver  was  but  -&§  of  one  cent  per  ton  per  mile. 

Allow  me  to  briefly  mention-a  project  of  vital  importance  to  the  whole 
country,  and  closely  allied  to  the  improvement  of  our  Western  rivers. 
1  mean  the  Lake  Michigan  and  Mississippi  Elver  Canal,  commonly 
known  as  the  Hennepin  Canal.  By  the  construction  of  this  short  canal 
from  the  Illinois  Kiver  at  Hennepin  to  Rock  Island  on  the  Mississippi, 
and  but  64  miles  in  length,  we  complete  an  unbroken  chain  of  free 
water-way  for  the  transportation  of  freight,  absolutely  in  the  hands  of 
the  people,  from  the  bay  of  New  York,  up  the  Hudson  Eiver,  and 
through  the  Erie  Canal  and  great  lakes  to  Chicago ;  thence  down  the 
present  Illinois  and  Michigan  Canal  to  Heunepiu,  and  across  to  Eock 
Island  on  the  Mississippi,  having,  with  its  branches,  more  than  15,000 
miles  of  steamboat  navigation.  The  importance  of  constructing  this 
short  canal,  costing  but  a  trifle  over  $6,000,000,  completing  an  un- 
broken water  route  through  the  very  heart  of  our  country,  from  the 
Atlantic  to  the  Gulf  of  Mexico  and  the  savannas  of  the  South,  and  up 
the  Missouri  to  the  base  of  the  Eocky  Mountains,  on  the  region  of  eter- 
nal snow  cannot  be  overestimated.  The  construction  of  this  canal  will 
reduce  the  cost  of  transportation  fully  one  half  from  the  great  North- 
west to  the  seaboard  and  the  markets  of  Europe. 

I  will  give  one  more  illustration  of  the  influence  of  water-routes  on 
railroad  charges.  The  railway  commissioners  of  the  State  of  Illinois 
have  fixed  the  maximum  rates  on  wheat  in  car-load  lots  per  130  miles  at 
7j^o  cents  per  bushel  (and  it  is  believed  they  all  strictly  adhere  to  these 
rates,  except  the  Eock  Island  road  where  it  comes  in  competition  with 
the  Illinois  and  Michigan  Canal  and  the  Illinois  Eiver).  The  charge 
from  Henry  to  Chicago,  J30  inUes,  via  the  Illinois  and  Michigan  Canal, 


INTERSTATE    COMMERCE.  235 

including  State  tolls,  is  3  cents  per  bushel  on  wheat.  The  Peoria  branch 
of  the  Rock  Island  road  charges  canal  rates  from  Henry  to  Chicago  (3 
cents  per  bushel);  and  from  Tiskilwa,  120  miles  from  Chicago,  and  on 
the  main  line  of  the  same  road,  but  away  from  the  canal,  they  charge 
7-j^V  cents  per  bushel.  The  improvement  of  our  Western  rivers  and  the 
construction  of  this  short  canal  connecting  the  two  great  water  systems 
of  the  continent  will  greatly  promote  commerce  among  the  States  and 
so  reduce  the  cost  of  transporting  the  products  of  the  country  as  will 
enable  the  smallest  farmer  to  make  his  home  attractive  and  beautify 
this  whole  wonderful  Northwest. 


SAFETY  COUPLERS. 

Statement  by  Judge  Thomas  Russell,  chairman  of  tlie  Massachusetts  rail- 
road commission. 

I  take  the  liberty  of  addressing  you  upon  a  subject  which  was  not 
brought  to  my  attention  when  I  testified  before  Ae  Committee  on  Inter- 
state Commerce.  Indeed,  the  matter  of  safety  couplers  was  not  be- 
fore your  committee,  but  it  is  a  question  pertaining  to  the  regulation  of 
inter-State  commerce  by  Congress,  and  it  is  one  that  concerns  the  safety 
and  the  lives  of  many.  It  is  estimated  that  every  year  more  than  a 
thousand  men  are  injured  in  the  United  States,  including  more  than  two 
hundred  killed,  by  accidents  resulting  from  the  coupling  or  uncoupling 
of  cars.  This  number  would  be  greatly  reduced  if  the  old  link  and  pin 
could  be  superseded  by  any  good  safety  coupler. 

No  one  doubts,  I  believe,  that  this  is  a  tit  subject  for  Congressional 
action.  The  very  statutes  which  have  been  wisely  passed  by  several 
States  recognize  the  fact  that  their  jurisdiction  is  limited  either  by  law 
or  by  the  laws  of  traffic.  No  State  presumes  absolutely  to  forbid  the 
entrance  of  cars  united  by  any  form  of  coupler. into  its  territory  under 
all  circumstances. 

Theoretically,  Congress  can  only  legislate  to  advantage  in  regard  to 
through  traffic.  And  whatever  may  be  accomplished  by  the  harmoni- 
ous legislation  of  the  several  States,  it  is  evident  that  it  must  be  liable 
to  great  imperfection,  when  we  consider  the  number  of  jurisdictions 
through  which  traffic  is  conducted  and  the  widely  different  opinions 
and  the  variety  of  interests  that  tend  to  produce  discord  where  har- 
mony is  so  desirable. 

Practically,  too,  Congressional  action  regulating  inter  State  traffic  will 
control  local  traffic.  Self-interest  and  common  sense  will,  either  by 
State  legislation  or  by  voluntary  action,  make  the  coupler  of  the  whole 
country  the  coupler  of  every  part.  No  freight  car  will  be  constructed 
which  cannot  be  lawfully  sent  through  the  whole  land. 

I  recognize  the  difficulty  that  must  delay  for  a  long  time  the  universal 
adoption  of  safety  couplers.  But  this  seems  to  be  a  reason  not  for 
postponing  but  for  hastening  initial  action.  It  is  time  to  begin.  Much 
difficulty  and  delay  will  vanish  when  Congress  shows  itself  to  be  in 
earnest  in  dealing  with  this  matter.  The  chief  objection  to  legislation 
seems  to  be  distrust  in  any  tribunal  that  can  be  selected  to  decide  the 
merits  of  different  devices.  It  will  be  said  thar  those  best  qualified  as 
experts  are  committed  by  their  prejudices  and  interests,  or  by  the  preju- 
dices and  interests  of  their  employers,  so  that  they  cannot  judge  fairly. 
Hut  competent  and  fair  men  can  be  found.  Such  a  man  as  N.  M  For- 
jjev,  of  New  York,  would  command,  universal  respect,  both  for  his  skill 


236  INTEKSTATE    COMMERCE. 

as  an  expert  and  for  his  integrity  as  a  man.  There  must  be  three  such 
men  in  the  United  States.  Besides,  important  as  it  is  to  secure  the  best 
device,  it  is  more  important  to  have  uniformity  than  to  have  the  abso- 
lutely best. 

There  would  be  reason  for  congratulation  if  the  first  result  of  agita- 
tion for  Congressional  action  upon  inter  State  commerce  should  be, 
not  in  the  interest  of  shippers,  important  as  those  interests  are,  but  for 
the  protection  of  the  lives  and  limbs  of  the  men  by  whom  that  vast 
traffic  is  conducted. 


THE  TRANSPORTATION  OF  SLEEPING  OAKS. 

The  committee  has  received  complaints  from  two  companies  running 
excursion  and  private  sleeping  carsj  to  the  effect  that  certain  railroads 
have  refused  to  transport  their  cars  because  of  contracts  with  a  certain 
sleeping  car  company,  giving  the  latter  the  exclusive  privilege  of  run- 
ning cars  of  that  description  over  their  lines. 

W.  H.  Shuey,  superintendent  of  the  Worcester  Excursion  Car  Com- 
pany, of  Worcester,  Mass.,  says: 

"A  certain  sleeping-car  company,  holding  contracts  with  railroad  com- 
panies whose  lines  cover  thousands  of  miles,  has  entered  the  field  in  di- 
rect competition  with  us  in  the  business  of  leasing  "private  cars  for  the 
special  and  exclusive  use  of  the  lessee  and  his  party.  In  this  competi- 
tion I  think  we  have  nothing  to  fear,  as  the  demand  for  private  cars 
will  naturally  increase  with  the  increased  supply,  and  we  will  undoubt- 
edly gain  some  business  at  the  cost  of  our  competitor's  advertising  ac- 
count. But  this  same  sleeping-car  company  has  endeavored  to  make 
contracts  with  the  railroad  companies  by  the  conditions  of  which  they 
(the  railroad  companies)  agree  to  prohibit  the  haulage  of  the  sleeping, 
parlor,  or  private  cars  of  any  other  company  over  their  lines,  thus  giv- 
ing the  contractors  the  exclusive  privilege  of  offering  its  cars  for  haul- 
age. In  one  instance  a  contract  of  this  kind  has  been  signed,  it  is 
claimed,  for  fifteen  years,  and  the  superintendents  and  passenger  agents 
of  the  railroad  company  have  been  notified  that  they  must  not  accept 
our  cars  for  transportation. 

"I  have  failed  to  secure  grounds  for  a  test  case  with  this  company, 
owing  to  the  fact  that  it  has  hauled  every  car  of  ours  offered  them, 
even  since  the  existence  of  the  so-called  iron  clad  contract,  notwith- 
standing the  orders  to  the  contrary  issued  to  its  agents.  In  each  case, 
however,  the  application  has  been  made  in  time,  to  the  general  office, 
and  on  some  pretext  or  other,  usually  'by  consent  of  the  sleeping-car 
company,'  orders  have  been  issued  to  accept  our  cars  for  transportation. 
The  effect,  however,  of  the  publication  of  the  orders  shutting  us  oat  has 
been,  even  now,  a  serious  injury  to  our  business,  and  1  have  been  com- 
pelled in  several  cases  to  agree  to  release  our  lessees  in  case  the  transpor- 
tation of  our  cars  should  be  prevented  by  the  interference  of  any  sleep- 
ing car  company's  contract.  I  think  the  only  sure  method  of  preventing 
a  continuance  of  this  difficulty  would  be  to  secure  such  legislation  as  will 
make  hall  any  such  'exclusive  privilege'  contract  as  1  have  alluded  to. 

"As  our  business  is  almost  exclusively  interstate  in  its  nature,  it  is 
apparent  that  if  the  bill  regulating  interstate  traffic  was  so  framed 
that  it  would  include  the  compulsory  haulage  of  our  cars,  which  could 
be  designated  as  'private  or  special  ears  containing  passengers  and 
personal  luggage,'  then,  alter  its  passage,  we  would  be  in  a  position 


INTERSTATE    COMMERCE.  237 

to  advertise  that  all  railroads  in  the  United  States  of  proper  gauge 
would  haul  our  cars.  Our  business  is  that  of  leasing,  to  dramatic 
companies,  pleasure  parties,  or  business  men,  private  or  special  cars. 
fully  equipped  and  provided  with  servants,  in  much  the  same,  manner 
in  which  a  yacht  or  furnished  house  with  servants  is  leased.  It  de- 
volves upon  the  lessee  to  make  transportation  arrangements  with  the 
railroad  companies,  and  in  consequence  of  the  rapid  development  of 
our  business  during  a  very  few  years  the  railroad  companies  gener- 
ally have  adopted  a  nearly  uniform  private-car  tariff." 

A.  F.  Higgs,  of  New  York,  president  of  the  Monarch  Parlor  Sleeping 
Car  Company,  writes  as  follows  :   . 

"  I  desire  to  call  attention  to  a  feature  of  passenger  traffic  which  has 
come  up  of  late,  and  which  I  believe  should  be  considered  by  your  com- 
mittee as  unjust  and  unconstitutional.  This  company,  for  instance,  has 
running  arrangements  with  the  Chicago  and  Eastern  Illinois  and  the 
Evansville  andTerre  Haute  Railroads,  the  latter  having  runningarrange- 
inents  with  its  Southern  connection,  the  Louisville  and  Nashville  Rail- 
road. The  latter,  however,  has  an  exclusive  contract  with  Mr.  Pullman 
to  run  his  sleeping  cars,  and  no  others,  over  the  said  Louisville  and 
Nashville  Railroad.  I  come  to  Henderson  with  my  Monarch  sJeejmr 
with  a  load  of  people  bound  to  New  Orleans.  The  Louisville  and  Nash- 
ville says,  i  We  would  like  to  take  your  people  and  your  car,  but  our 
contract  with  the  Pullman  Company  shuts  you  out,  and  you  must  trans- 
fer your  passengers  to  a  Pullman  car  and  take  your  car  back  to  Chi 
cago.'  I  contend  that  no  contract  has  a  right  to  debar  me,  coming  from, 
another  State  and  road,  from  going  over  the  Louisville  and  Nashville, 
if  I  and  my  passengers  tender- the  price  of  passage.  Now,  this  applies 
all  over  the  country  where  the  Pullman  people  have  contracts,  and  no 
interstate  commerce  bill  will  be  complete  which  does  not  provide  for 
abolishing  this  monopoly." 


THE  TRUNK  LINE  CONTRACT. 

The  committee  has  received  from  Mr.  Fink  an  official  copy  of  the 
"  contract  between  the  trunk  lines  for  the  establishment  and  mainte- 
nance of  tariffs  on  competitive  freight  and  passenger  traffic,"  entered 
into  November  6,  L885,  and  reading  as  follows: 

Contract  made  this  6th  day  of  November,  1885,  by  and  between  the  Grand  Trunk  Railway 
Company,  of  Canada;  thu  New  York  Central  and  Iludaon  River  Railroad  Company; 
the  New  York,  Went  Shore  and  Buffalo  Railway  ;  the  Delaware,  Lackawanna,  and  West- 
ern Railroad  Company;  the  New  York,  Lake  Erie  and  Western  Railroad  Company;  the 
Pennsylvania  Railroad  Company  ;  the  Baltimore  and  Ohio  Railroad  Company. 

[The  western  termini  of  the  roads  of  these  parties,  herein  referred  to,  are  understood 
to  be  as  follows:  Toronto,  Suspension  Bridge,  Niagara  Falls,  Tonawanda,  Black 
Rock,  Buffalo,  East  Buffalo,  Buffalo  Junction,  Dunkirk,  Salamanca,  Erie,  Pitts- 
burgh, Bellaire,  Wheeling,  Parkersburg.  ] 

Whereas  past  experience  has  fully  established  the  fact  that  the  joint  action  of  com- 
peting railroad  companies  in  establishing  and  adhering  to  uniform  rates  of  transpor- 
tation for  like  services  to  the;  public  is  necessary  in  order  to  avoid  the  evils  of  unjust 
discrimination  and  fluctuating  rates,  so  injurious  to  commercial  as  well  as  to  the  rail- 
road interests : 

Therefore,  the  parties  above  named  enter  into  the  following  contract  for  the  pur- 
pose of  jointly  establishing  tariffs  over  their  respective  roads  on  competitive  traffic, 
both  passenger  and  freight  (lion-after  more  particularly  specified),  and  of  publishing 
said  tariffs  and  strictly  maintaining  the  same. 


238  INTERSTATE    COMMERCE. 

ARTICLE  I.  All  measures  necessary  to  carry  out  the  purpose  of  this  contract  shall 
be  taken  jointly  by  the  parties  hereto,  or  jointly  by  such  of  the  parties  as  may  be 
directly  interested,  and  should  any  question  arise  upon  which  they  cannot  agree  in 
relation  to  the  terms  of  this  contract  or  to  any  matter  arising  heienuder,  it  shall  be 
decided  by  arbitration,  as  hereafter  provided,  it  being  one  of  the  fundamental  prin- 
ciples of  this  contract  that  no  party  shall  take  separate  action  in  any  matter  affecting 
the  interests  of  one  or  more  of  the  other  parties,  contrary  to  the  spirit  and  intent  of 
this  contract. 

ART.  II.  The  parties  to  this  contract  (who,  for  convenience  sake,  will  hereafter  be 
designated  as  ''the  trunk  lines")  agree  to  enter  jointly  into  arrangements  with  their 
connecting  roads,  both  immediate  and  indirect,  for  the  establishment  of  through  tariffs 
to  and  from  points  beyond  the  termini  of  the  trunk-line  roads,  and  for  the  distribu- 
tion of  the  traffic  of  said  connecting  roads  among  the  trunk  lines,  as  hereinafter  pro- 
vided. 

ART.  III.  The  conditions  upon  which  the  trunk  lines  will  enter  into  such  arrange- 
ments are,  that  said  connecting  roads  will  also  strictly  adhere  to  such  established  tar- 
iffs and  comply  with  the  rules  and  regulations  contained  in  this  contract,  or  tbatmay 
from  time  to  time  be  established  by  the  trunk  lines,  in  the  common  interest,  to  secure 
the  objects  above  set  forth.  It  is  an  essential  part  of  this  contract  that  lie  trunk 
lines  will  not  continue  to  be  nor  hereafter  become  parties  to  any  traffic  arrangements 
with  any  of  the  aforesaid  connecting  roads  which  decline  or  fail  to  co-operate  with 
them  to  this  end. 

ART.  IV.  The  traffic  arrangements  herein  referred  to  are:  The  issue  or  honoring  of 
joint  through  bills  of  lading  or  through  tickets  ;  the  interchange  of  through  freight 
or  passenger  cars;  the  collection  and  advancing  of  freight  charges  or  passenger  fares, 
or  participating,  by  divisions,  in  through  rates  or  fares  upon  the  traffic  covered  by 
this  contract.  When  the  term  "affiliated  roads"  is  hereinafter  used,  it  refers  to  ail 
connecting  roads  which  agree  to  co-operate  with  the  trunk  lines,  and  with  which  any 
of  such  traffic  arrangements  are  established. 

ART.  V.  The  trunk  lines  will  communicate  to  the  aforesaid  connecting  roads  the 
conditions  expressed  in  Article  III,  upon-which  they  will  continue  the  traffic  arrange- 
ments (both  freight  and  passenger)  referred  to  in  Article  IV,  and  will  require  the 
written  consent  (in  agreed  form)  of  the  aforesaid  connecting  roads  to  said  conditions, 
which  shall  be  tiled  with  this  contract. 

ART.  VI.  Each  of  the  trunk  lines  further  undertakes  to  fully  control  the  main- 
tenance of  agreed  rates  and  fares  on  its  own  road,  as  well  as  over  its  affiliated  roads, 
so  far  as  such  rates  and  fares  are  the  subject  of  this  contract. 

It  is  the  fundamental  principle  of  this  contract  that  each  trunk  line  shall  act  as 
the  fully  authorized  agent  and  representative  of  its  affiliated  roads  in  all  matters 
connected  with  the  maintenance  of  the  joint  tariffs  referred  to  herein,  so  far  as  traffic 
over  its  own  road  is  concerned,  and  with  the  distribution  of  traffic  among  the  trunk 
lines  provided  for  herein,  and  that  no  officer  or  agent  of  said  affiliated  roads  shall 
have  the  authority  or  power  to  vary  from  such  agreed  joint  tariffs  or  do  any  act 
in  violation  of  this  contract. 

ART.  VII.  The  managers  and  agents  of  the  fast  freight  lines  having  traffic  arrange- 
ments with  any  of  the  trunk  lines  shall  be  under  the  sole  control  of  the  trunk  line 
over  whose  road  said  fast  freight  lines  are  operated,  so  far  as  the  maintenance  ot 
agreed  tariffs  is  concerned  ;  and  any  officer  or  agent  of  a  fast  freight  line  who,  in  vio- 
lation of  this  contract,  makes  special  agreements  for  reduced  rates,  or  which  have  the 
effect  of  evading,  directly  or  indirectly,  the  established  tariff  and  rules,  eveu  when 
ordered  to  do  so  by  any  connecting  road,  shall  be  discharged  from  the  service,  and 
shall  not  be  employed  by  any  trunk  line  or  its  affiliated  roads,  and  no  trunk  line  shall 
be  party  to  carrying  out  such  agreements. 

ART.  VIII.  It  is  further  agreed  that  no  trunk  line  or  its  affiliated  roads  shall  enter 
into  any  contract  with  shippers  upon  traffic  covered  by  this  contract,  which  guaran- 
tees rates  for  any  period  of  time,  and  that  rates  shall  only  be  quoted  from  day  to  day ; 
but  this  shall  not  prevent  the  guaranteeing  of  tariff  rates  on  traffic  which  can  be  for- 
warded within  ten  days,  or  such  other  time  as  may  be  agreed  upon  for  giving  notice 
of  an  advance  in  tariff;  nor  shall  it  prevent  the  establishment  of  tariffs  on  special  ar- 
ticles for  a  specified  time  by  joint  action. 

ART.  IX.  The  tariffs  to  be  established  and  maintained  under  this  contract  apply 
to— 

( 1 )  East-bound  dead  freight  and  live  stock  and  dressed  meat  traffic,  as  may  be  more 
fully  specified  hereafter. 

(2)  West-bound  freight  from  the  seaboard  cities  to  the  western  termini  of  the  trunk 
lines  and  beyond. 

(3)  Competitive  passenger  traffic,  first  and  second  class,  as  maybe  more  fully  speci- 
fied hereafter. 

(4)  Immigrant  traffic. 


INTERSTATE    COMMERCE.  239 

DIVISION   OF   TRAFFIC. 

ART.  X.  In  order  to  secure  the  maintenance  of  agreed  tariffs  by  removing  the  mo- 
tive for  their  violation,  openly  or  secretly,  it  is  further  agreed  that,  the  following 
divisions  of  traffic  Khali  be  made  between  the  trunk  lines  :• 

(I)  East-bound  dead  freight  traffic. 

('2)  East-bound  live  stock  and  dressed  meat  traffic. 

(3)  West-bound  freight  traffic. 

(4;  Passenger  traffic-,  east-bound  and  west-bound,  first  and  second  class. 

(5)  Immigrant  traffic. 

And  such  other  divisions  as  may  hereafter  bo  agreed  upon. 

ART.  XI.  Separate  contracts  shall  be  made  covering  each  division,  based  upon  the 
principle  that  suitable  provisions  shall  be  made  in  each  contract  for  each  line's  secur- 
ing and  carrying  its  allotted  percentage,  and  that  ouly  such.cornpensation,  it' any. 
shalh  be  allowed  for  carrying  excess  of  freight  or  passengers  as  will  promote  this  re- 
sult. Settlement  of  balances  which  may  accrue  under  said  contracts  shall  be  made 
monthly. 

ART.  XII.  In  order  to  secure  the  prompt  payment  of  such  balances,  the  contracts 
for  division  of  traffic  shall  provide  for  deposits  of  a  sufficient  amount  of  money  to  the 
credit  of  a  trustee,  or  trustees,  upon  which  the  monthly  drafts  for  settlement  of  bal- 
ances shall  be  made\ 

ART.  XIII.  Other  railroad  com  panics  not  parties  to  this  contract,  but  whose  co-op- 
eration is  deemed  necessary  or  desirable,  may  also  become  parties  to  said  divisions,  by 
consent  of  the  trunk  lines  directly  interested. 

DIVISION   OF   TRAFFIC  BETWEEN   CONNECTING  ROADS. 

ART.  XIV.  The  trunk  lines  recognize  as  a  necessity  that  their  western  connecting 
roads,  to  promote  their  own  interest  as  well  as  that  of  the  trunk  lines,  shall  arrange 
for  a  fair  division  between  themselves  of  traffic  originating  west  of  the  western  ter- 
mini of  the  trunk  line  roads  and  destined  to  said  termini  or  east  thereof,  and  for  a 
division  of  the  west-bound  traffic  originating  at  or  east  of  the  western  termini  of  the 
trunk  lines,  and  also  that  their  eastern  connections  shall  arrange  for  divisions  of  traf- 
fic originating  east  of  the  eastern  termini  of  the  trunk-line  roads,  and  destined  to 
their  western  termini  or  west  thereof.  The  trunk  lines  will,  therefore,  jointly  request 
their  affiliated  roads  to  at  once  enter  into  contracts  for  such  divisions  from  all  points 
at  which  the  traffic  has  heretofore  been  divided,  and  from  such  additional  noiuts  as 
may  be  deemed  necessary.  They  further  agree  that  they  will  give  such  a&l  to  said 
affiliated  roads  as  may  be  necessary  to  carry  out  said  contracts. 

ART.  XV.  The  disposition  to  be  made  of  the  traffic  of.  the  affiliated  roads,  so  far  as 
it  affects  the  interests  of  the  trunk  lines,  shall  be  subject  to  the  approval  of  the  trunk 
lines,  acting  jointly,  and  shall  not  bo  in  conflict  with  the  intent  and  spirit  of  this  con- 
tract, viz  :  the  mutual  protection  of  the  trunk  lines  and  their  affiliated  roads. 

ART.  XVI.  In  case  any  connecting  road  at  a  point  where  a  division  of  traffic  may 
be  deemed  necessary,  refuses  to  become  a  party  to  such  division,  and  it  should  be- 
come necessary  in  order  to  protect  the  parties  to  such  division,  the  trunk  lines  will 
act  jointly  in  determining  the  relations  of  such  connecting  road  to  the  trunk  lines. 

ART.  XVII.  It  being  one  of  the  objects  of  this  agreement  to  reduce  the  expenses 
of  the  companies  parties  hereto,  the  trunk  lines  further  agree  that  they  will  limit  the 
fast  freight  or  co-operative  lines  to  the  lowest  possible  number  consistent  with  the 
proper  conduct  of  their  business;  and  all  soliciting  and  advertising  agencies  shall  be 
reduced  to  such  number  as  may  be  deemed  necessary  for  the  convenience  of  the  pub- 
lic and  proper  conduct  of  the  traffic;  and  so  far  as  practicable  all  offices  outside  of 
the  regular  station  offices  of  the  respective  companies  parties  hereto  shall  be  made 
joint  offices. 

ART.  XVIII.  The  trunk  lines  hereby  further  agree  that  after  January  1,  1886,  they 
will  not,  in  reference  to  any  passenger  traffic  covered  by  this  agreement,  pay  or  be 
parties  to  the  payment  of  commissions  to  any  agent  of  any  other  railroad  company 
for  selling  tickets  or  securing  passenger  business  over  their  respective  roads,  and  that. 
t  hey  will  not  permit  any  of  their  agents  to  receive  commissions  for  such  purposes :  and 
all  systems  of  paying  commissions  for  sale  of  passenger  tickets  or  securing  passenger 
traffic  shall,  so  soon  as  practicable,  be  absolutely  abolished. 

ART.  XIX.  This  contract  shall  go  into  effect  the  7th  day  of  November,  f885,  and 
continue  in  full  force  and  effect  until  December  31,  1886,  and  from  year  to  year  there- 
after. It  may  be  terminated  on  the  31st  day  of  December  of  any  year  by  any  party 
hereto  giving  thre  emonths'  prior  notice,  in  writing,  of  their  desire  to  withdraw  there- 
from. 


240  INTERSTATE    COMMERCE. 

In  witness  of  this  contract  the  parties  hereto  have  severally  caused  to  be  affixed 
the  signature  of  their  president  or  chief  executive  officer. 
In  presence  of: 

[SEAL.]     GRAND  TRUNK  RAILWAY  COMPANY  OF  CANADA. 
PerJ.  HICKSON, 

General  Manager. 
R.  WRIGHT. 

[SEAL.]     THE  NEW  YORK  CENTRAL  AND  HUDSON  RIVER  RAILROAD  COMPANY. 
By  CHAUNCEY  M.  DEPEW, 

President. 
H.  C.  DUVAL. 

[SEAL.]     THE  NEW  YORK,  LAKE  ERIE  AND  WESTERN  RAILROAD  COMPANY. 
By  JOHN  KING, 

President. 
Attest : 

A.  R.  MACDONOUGH, 

Secretary. 

[SEAL.]*    THE  DELAWARE,  LACKAWANNA  AND  WESTERN  RAILROAD  COMPANY. 
By  SAM.  SLOAN, 

President. 
Attest: 

FRED.  F.  CHAMBERS, 

Secretary. 

HORACE  RUSSELL, 
THE.  HOUSTON, 

As  Receivers  of  the  property  covered  by  the  first  mortgage  of  the  New 

¥ork,  West  Shore  and  Buffalo  Railway  Company. 
Attest: 

J.  D.  LAYING. 

[SEAL.]     THE  PENNSYLVANIA  RAILROAD  COMPANY. 
ByG.  B.  ROBERTS, 

President 
Attest : 

JNO.  C.  SIMS,  Jr., 

Secretary. 

The  Baltimore  and  Ohio  Railroad  Company,  subject  to  the  reservation  that  it  will 
be  bound  by  the  provisions  hereof  so  far  as  relates  to  passenger  traffic  only  in  case  it 
is  a  member  of  the  Trunk  Line  Passenger  Division. 

[SEAL.]  By  ROBERT  GARRETT, 

President. 
Attest : 

W.  H.  IJAMS, 

Secretary. 

The  above  is  a  correct  copv  of  the  contract  between  the  Trunk  Lines  named  therein. 

ALBERT  FINK, 

Commissioner. 


THE  TRUNK  LINE  ORGANIZATION  AND  RULES. 

The  following  is  an  official  copy  of  the  "Trunk  Line  Organization  and 
Rules,"  as  furnished  by  Mr.  Fink : 

TRUNK  LINE  ORGANIZATION. 

Whereas,  on  this  sixth  day  of  November,  1885,  a  contract  has  been  entered  into,  for 
the  purposes  fully  stated  therein,  between  the  following  parties :  the  Grand  Trunk 
Railway  Company  of  Canada,  the  New  York  Central  and  Hudson  River  Railroad 
Company,  the  New  York,  West  Shore  and  Buffalo  Railway,  the  Delaware,  Lacka- 
wauna  and  Western  Railroad  Company,  the  New  York,  Lake  Erie  and  Western 
Railroad  Company,  the  Pennsylvania  Railroad  Company,  the  Baltimore  and  Ohio 
Railroad  Company : 

Now,  therefore,  in  order  to  successfully  carry  out  the  provisions  of  said  contract, 
the  following  organization  and  general  rules  are  hereby  agreed  to  and  adopted: 


INTERSTATE    COMMERCE.  241 

TRUNK    LINE   PRESIDENTS'   COMMITTEE. 

SECTION  1.  The  presidents  or  chief  executive  officers  of  the  companies  shall  consti- 
tute a  committee,  to  be  known  as  the  trunk  line  presidents'  committee,  which  com- 
mittee shall  decide  upon  all  measures  necessary  to  carry  out  the  purpose  of  the  con- 
tract above  referred  to  and  authorize  the  same  to  be  put  into  effect.  The  committee 
shall  elect  a  chairman  from  its  own  members. 

SEC.  2.  Meetings  of  the  presidents'  committee  may  be  held  at  stated  times  to  be 
agreed  upon,  or  may  be  called  by  the  chairman  whenever  he  deems  it  necessary,  or 
upon  the  request  of  any  member. 

SEC.  3.  All  joint  measures  referred  to  in  section  1,  upon  which  the  presidents'  com- 
mittee, after  full  consideration,  cannot  agree,  shall  be  finally  decided  by  arbitration, 
in  the  manner  more  particularly  specified  hereafter. 

TRUNK  LINE  EXECUTIVE   COMMITTEE. 

SEC.  4.  The  presidents'  committee  shall  appoint  an  executive  committee,  to  be 
ealled  the  trunk  line  executive  committee,  and  to  consist  of  a  vice-president  of  each 
compauy,  which  committee  shall  be  charged  with  carrying  out  in  detail  the  instruc- 
tions of  the  presidents'  committee. 

SEC.  5.  The  presidents'  committee  shall  also  appoint  a  commissioner,  who  shall  act 
AS  secretary  of  said  committee,  and  as  chairman  of  the  trunk  line  executive  commit- 
tee, and  who  shall,  under  the  direction  of  said  committees,  carry  out  any  measures 
agreed  upon  or  decided  by  arbitration,  acting  as  their  executive  officer. 

SEC.  6,  The  trunk  line  executive  committee  shall  meet  at  stated  times  to  be  agreed 
upon,  or  upon  the  request  of  any  member,  or  whenever  deemed  necessary  by  the 
chairman. 

SEC.  7.  In  case  the  trunk  line  executive  committee  is  not  unanimous  upon  any 
question,  it  shall  be  the  duty  of  the  commissioner  to  endeavor  to  secure  an  agreement; 
but  failing  to  do  so,  the  question  at  issue  shall  be  forthwith  submitted  to  the  presi- 
dents' committee  for  their  action,  and  they  failing  to  agree,  to  arbitration,  as  speci- 
fied above.  The  presidents'  committee  may  direct  that  certain  questions  of  difference 
which  do  not  require  their  special  attention  shall  be  arbitrated  in  the  executive, 
freight,  or  passenger  committees,  and  the  rules  of  these  committees  may  specify  cases 
that  shall  go  to  arbitration  in  said  committees  without  being  referred  to  the  presi- 
dents' committee. 

SEC.  8.  Should  any  question  arise  in  the  trunk  line  executive  committee  which  re- 
<fuires  an  immediate  decision,  and  upon  which  the  members  of  the  committee  cannot 
agree,  the  commissioner  shall,  at  the  request  of  two-thirds  of  the  members  of  the  com- 
mittee, make  a  temporary  decision,  subject  to  the  final  action  of  the  presidents'  com- 
mittee, or  arbitration,  as  above  provided. 

FREIGHT  AND   PASSENGER   COMMITTEES. 

SEC.  9.  The  trunk  line  executive  committee  shall  appoint  two  subcommittees,  one 
for  the  freight  department,  to  be  called  the  freight  committee,  consisting  of  the  traffic 
managers  or  general  freight  agents,  and  one  for  the  passenger  department,  to  be  called 
the  passenger  committee,  consisting  of  the  traffic  managers  or  general  passenger 
agents  of  the  respective  companies,  and  to  them  shall  be  intrusted  the  transaction  of 
such  business  as  is  delegated  to  those  officers  in  their  respective  departments  in  the 
service  of  their  companies. 

SEC.  10.  The  trunk  line  executive  committee  shall  appoint  a  commissioner  for  the 
freight  department  and  a  commissioner  for  the  passenger  department,  each  of  whom 
shall  act  as  chairman  at  the  meetings  of  their  respective  committees,  with  the  same 
duties  in  said  committees  as  those  of  the  commissioner  in  the  executive  committee,  as 
specified  above. 

SEC.  11.  In  case  of  failure  to  agree  in  said  freight  and  passenger  committees,  the 
questions  at  issue  shall  be  referred  to  the  executive  committee,  to  be  acted  upon  as 
hereinbefore  provided. 

SPECIAL  COMMITTEES. 

SEC.  12.  The  freight  and  passenger  committees  may  appoint  subcommittees  for 
special  purposes  as  may  be  deemed  necessary  to  facilitate  the  transaction  of  business. 

AUTHORITY   OF   COMMITTEES. 

SEC.  13.  The  members  of  the  executive  committee  and  of  the  freight  and  passenger 
committees  are  authorized  to  act  with  full  authority  upon  all  questions  which  come 
under  the  jurisdiction  of  the  office  they  hold  in  the  service  of  their  companies.  No 
officer  or  agent  of  any  company  shall  be  a  member  of  said  committees  who  has  not 

16232  AP 16 


242  INTEESTATE    COMMERCE. 

full  authority  to  act  upon  all  questions  that  legitimately  come  before  said  commit- 
tees. In  case  any  company  has  no  vice-president  in  charge  of  the  traffic  department, 
duch  company  shall  appoint  an  officer  on  the  trunk  line  executive  committee,  fully 
authorized  to  deal  with  both  freight  and  passenger  matters  in  meetings  of  said  com- 
mittee ;  the  intention  being  that  all  business  that  comes  within  the  sphere  of  action 
of  each  committee  shall  be  promptly  and  dually  acted  upon  under  its  rules. 

SEC.  14.  The  object  for  which  meetings  of  the  several  committees  are  called  shall 
be  communicated  to  the  members  of  the  committees  at  the  time  the  call  is  made ;  but 
this  shall  not  prevent  the  consideration,  with  the  consent  of  all  the  members,  of 
other  business  at  such  meetings,  upon  which  action  may  be  required. 

SEC.  15.  Should  any  road  be  unable  to  be  represented  at  any  meeting  of  the  execu- 
tive, freight,  or  passenger  committees,  and  should  it  be  necessary  to  take  immediate 
action  upon  the  subject-matter  under  consideration,  the  chairman  of  such  committee 
shall  be  authorized  by  the  roads  not  represented,  to  act  for  said  roads,  such  act  ion  to  be 
binding  nntil  revoked  at  a  subsequent  meeting,  when  the  roads  may  be  represented ; 
it  being  the  intention  of  this  provision  to  avoid  delay  that  might  arise  from  the  non- 
attendance  of  members. 

SEC.  16.  Each  of  the  committees  above  named  shall  establish  its  rules  of  proced- 
ure, as  well  as  regulations  by  which  its  business  shall  be  governed,  not  in  conflict 
with  the  general  organization.  The  rules  of  the  trunk  line  executive  committee  ;u \ 
to  be  subject  to  the  approval  of  the  presidents'  committee,  and  those  of  the  freight 
and  passenger  committees  to  the  approval  of  the  trunk  lino  executive  committee. 

SEC.  17.  In  all  questions  of  order  and  procedure  in  said  committees  not  specially 
provided  for  in  the  rules,  the  vote  of  a  majority  of  the  mi-tubers  of  the  committee 
shall  govern,  and  in  case  of  a  tie  vote  the  decision  of  the  chairman  shall  be  final; 
but  all  questions  on  which  there  may  be  disagreement  in  respect  of  measures  neces- 
sary to  promptly  and  efficiently  carry  out  the  purpose  and  object  of  the  contract,  if 
not  finally  decided  by  the  presidents'  committee,  shall  be  decided  by  arbitration. 

SEC.  18.  A  secretary  of  the  trunk  line  executive  committee,  as  well  as  secretaries 
for  the  freight  and  passenger  committees,  shall  be  appointed  by  the  chairmen,  with 
the  approval  of  the  respective  committees,  whose  duty  it  shall  be  to  keep  records  of 
the  proceedings  of  the  various  committees  and  to  perform  such  other  services  as  may 
be  assigned  to  them. 

SEC.  19.  Copies  of  the  proceedings  of  meetings  shall  be  furnished  to  the  members 
of  the  committees,  respectively,  after  the  adjournment  of  each  meeting,  and  they 
shall  carefully  examine  the  same  and  notify  the  chairman  promptly  of  any  correction 
or  change  therein  that  may  be  required.  Unless  such  notice  is  received  within  a 
week  after  the  receipt  of  the  proceedings,  it  shall  be  presumed  that  they  are  ap- 
proved. 

SEC.  20.  The  commissioner  shall  also  appoint  such  other  officers  and  clerks  as  may 
be  deemed  necessary  by  the  executive  committee,  to  carry  out  the  work  contem- 
plated under  the  contract. 

EXPENSES  OF  ORGANIZATION. 

SEC.  21.  The  expenses  of  the  organization  shall  be  borne  by  the  parties  to  the  con- 
tract in  proportion  to  the  gross  revenue  derived  from  the  business  covered  thereby, 
as  nearly  as  this  can  be  ascertained. 

SEC.  22.  The  commissioner  shall  have  supervision  of  the  expenses  of  the  organiza- 
tion, under  the  direction  of  the  trunk  line  executive  committee,  and  said  commit- 
tee shall  audit  the  accounts  monthly,  or  cause  them  to  be  audited  through  a  sub- 
committee. 

SEC.  23.  A  deposit  of  $15,000  shall  be  made  with  the  commissioner,  as  a  working 
fund  to  defray  the  current  expenses  of  the  organization.  The  amount  to  be  deposited 
by  each  trunk  line  shall  be  assessed  on  the  basis  stated  in  section  21. 

ARBITRATION. 

SEC.  24.  A  permanent  arbitrator  (or  board  of  arbitration)  shall  be  appointed  by 
the  trunk  line  presidents'  committee,  to  whom  shall  be  submitted  for  final  decision 
all  questions  arising  under  the  contract  upon  which  the  parties  thereto  cannot  agree. 
It  shall  be  the  duty  of  said  arbitrator  to  devote  his  whole  time  to  the  duties  of  his 
office,  to  attend  the  meetings  of  the  various  committees,  as  far  as  practicable,  and  to 
keep  himself  informed  as  to  the  facts  bearing  on  all  questions  which  are  likely  to  arise 
and  upon  which  he  may  be  called  to  adjudicate. 

SEC.  25.  Before  any  question  is  submitted  to  arbitration,  a  meeting  of  the  inter- 
ested parties  shall  be  held  for  the  purpose  of  endeavoring  to  agree  upon  the  question 
at  issue,  at  which  the  arbitrator  shall  be  present.  If  no  agreement  can  be  reached, 
and  the  arguments  and  facts  laid  before  the  meeting  are  thought  to  be  sufficient,  by 


INTERSTATE   COMMERCE. 

the  interested  parties  as  well  as  by  the  arbitrator,  to  form  a  basis  for  decision,  said 
decision  shall  be  rendered  by  the  arbitrator  upon  such  facts,  as  soon  as  practicable, 
without  further  hearing. 

SEC.  26.  But  if  it  is  thought  necessary  to  have  additional  facts  and  arguments  sub- 
mitted, in  order  to  enable  the  arbitrator  to  reach  correct  conclusions,  then  such  addi- 
tional facts  and  arguments  shall  be  laid  before  the  arbitrator  within  ten  days  from 
the  date  of  said  meeting,  except  in  cases  where  their  preparation  may  require  addi- 
tional time,  when  such  additional  time  shall  be  determined  by  the  arbitrator. 

SEC.  27.  SVithiu  a  week  from  the  submission  of  such  arguments  and  facts,  a  decision 
shall  be  rendered  by  the  arbitrator. 

SEC.  28.  If  said  decision  is  not  satisfactory  to  any  one  of  the  interested  parties,  and  if 
can  be  shown  to  the  satisfaction  of  the  arbitrator,  within  five  days  after  the  decision 
is  made,  that  facts  which  should  have  had  a  material  bearing  upon  his  decision  were 
either  not  fully  considered  or  were  nor  submitted  at  the  first  hearing,  the  case  shall 
be  immediately  reopened.  The  grounds  upon  which  such  reopening  is  granted  by  th« 
arbitrator  shall  be  fully  stated  by  him  and  communicated  to  the  interested  parties, 
with  the  arguments  of  the  dissenting  party  or  parties,  within  fifteen  days  after  the 
original  decision  is  made,  and  a  hearing  shall  be  had  within  ten  days  thereafter. 
At  such  rehearing  parties  shall  be  permitted  to  submit  only  arguments  and  facts  per- 
tinent to  the  question  raised  by  the  dissenting  party  or  parties,  and  upon  which  the 
rehearing  was  granted ;  and  the  arbitrator  shall  then  either  reaffirm  or  modify  his 
previous  decision,  and  this  shall  be  final. 

SEC.  2i).  Nothing  in  the  above  rules  shall  prevent  the  settlement  of  any  question 
upon  which  the  trunk  liue  executive  or  the  freight  or  passenger  committees  cannot 
agree,  by  a  decision  of  the  chairmen  of  the  respective  committees,  when  submitted  to 
them  by  agreement  of  the  parties  interested;  provided  the  questions  at  issue  can  be 
acted  upon  under  the  authority  conferred  on  the  respective  committees. 

RELATIONS   WITH  AFFILIATED   ROADS*. 

SEC.  30.  To  facilitate  the  transaction  of  business  between  the  trunk  lines  and  their 
affiliated  roads,  the  chief  managing  officers  of  said  affiliated  roads  and  the  members 
of  the  trunk  line  executive  committee  shall  constitute  a  committee  to  be  called  the 
joint  committee.  It  shall  be  its  duty  to  establish  all  through  tariffs  and  classifica- 
tions, to  agree  upon  divisions  of  through  rates  and  through  fares,  and  to  make  such 
rules  and  regulations  affecting  the  tariffs  as  may  be  deemed  necessary  to  secnre  uni- 
formity and  stability. 

SEC.  31.  The  chairman  of  the  trunk  line  executive  committee  shall  act  as  chairman 
of  the  joint  committee,  with  the  same  duties  as  under  the  organization  of  the  trunk 
line  executive  committee;  but  said  joint  committee  may  make  such  additional  organi- 
zation as  may  be  deemed  desirable  to  carry  out  the  object  for  which  it  is  established. 

SEC.  32.  The  joint  committee  shall  appoint  the  following  sub-committees :  An  east- 
bound  classification  committee,  cotton  rate  committee,  tobacco  rate  committee,  and 
such  other  committees  as  may  be  considered  necessary  to  facilitate  the  transaction  of 
business. 

SEC.  33.  The  trunk  line  executive  committee  shall  act  as  the  standing  committee 
of  the  joint  committee. 

SEC.  34.  If  the  joint  committee  cannot  agree  upon  joint  tariffs  or  upon  any  rules  or 
regulations  affecting  said  tariffs,  or  uppn  the  division  of  rates  and  fares  with  com- 
mon connections  of  two  or  more  trunk  lines,  the  trunk  line  executive  committee  shall 
decide  the  question  under  its  rules,  after  hearing  the  arguments  of  the  various  par- 
ties interested. 

SEC.  35.  If  any  affiliated  road  is  not  represented  at  any  meeting  of  the  joint  com- 
mittee, the  trunk  line  or  trunk  \iues  over  which  said  road  has  traffic  arrangements 
shall  represent  the  said  affiliated  road.  In  case  any  affiliated  road  has  traffic  arrange- 
ments with  several  trunk  lines,  who  may  not  be  able  to  agree,  then  the  trunk  line 
executive  committee  as  a  whole  shall  take  action  under  its  rules  upon  the  question 
at  issue. 

SEC.  36.  The  joint  committee  may  be  called  together  at  the  request  of  three  mem- 
bers of  the  trunk  line  executive  committee,  or  at  the  request  of  the  chief  managing 
officers  of  three  of  the  affiliated  roads,  or  by  the  chairman. 

GENERAL  RULES. 

It  being  recognized  that  the  successful  carrying  out  of  the  contract  depends  upon 
the  good  faith  of  the  parties  thereto,  and  that  it  therefore  becomes  the  duty  of  each 
trunk  line  not  only  to  conform  to  the  intent  and  spirit  of  the  contract,  eo  far  as  its  own. 
road  is  concerned,  but  also  to  take  the  responsibility  for  the  acts  of  its  affiliated  roadd, 
the  following  general  rules  based  upon  this  principle  are  hereby  adopted,  subject  lo 
such  amendments  and  additions  as  experience  may  suggest. 


244 


INTERSTATE    COMMERCE. 


SEC.  37.  In  case  a  violation  of  the  established  tariffs  or  the  rules  governing  the 
same  comes  to  the  knowledge  of  any  trunk  line,  notice  shall  at  once  be  given  to  the 
commissioner,  who  shall  communicate  the  charges  to  the  trunk  line  over  whose  road 
the  traffic  upon  which  the  alleged  violation  is  made  has  been  forwarded,  or  is  to  be 
forwarded,  and  said  trunk  line  shall  at  once  make  the  necessary  investigation  of  the 
acts  of  its  own  agents  or  the  agents  of  its  connecting  or  fast  freight  lines  for  which 
it  has  assumed  the  responsibility,  and  finding  the  charge  correct,  it  shall  immediately 
take  measures  to  remove  the  cause  of  complaint  and  report  the  facts  and  any  action 
taken  through  the  commissioner  to  the  trunk  line  executive  committee,  which,  if 
necessary,  shall  at  once  bo  called  together  to  take  joint  action  in  conformity  with  the 
contract. 

SEC.  38.  Should  a  violation  of  the  established  tariffs  or  the  rules  governing  the 
same  come  to  the  knowledge  of  any  of  the  affiliated  roads,  the  same  shall  be  reported 
to  the  trunk  line  or  trunk  lines  with  which  it  has  traffic  arrangements,  and  said 
trunk  line  shall  proceed  as  provided  in  section  37. 

SEC.  39.  If  the  cause  of  complaint  is  not  removed  within  a  week  from  the  time  the 
complaint  is  made,  or  if  any  trunk  line  neglects  or  refuses  to  take  prompt  and 
proper  action  in  the  matter,  as  provided  in  section  37,  it  shall  be  the  duty  of  the  com- 
missioner to  at  once  call  a  meeting  of  the  executive  committee  to  take  such  action  in 
the  matter  as  may  be  deemed  necessary  to  enforce  the  provisions  of  the  contract. 

SEC.  40.  Pending  the  action  of  the  executive  committee,  the  complaining  party 
shall  not  meet  any  .alleged  reductions  in  rates  or  take  any  separate  action  whatsoever 
in  violation  of  the  contract ;  but  all  action  necessary  to  protect  the  trunk  lines  and 
their  affiliated  roads  shall  be  taken  jointly,  and  under  the  instructions  of  the  execu- 
tive committee. 

SEC.  41.  The  trunk  line  executive  committee  is  authorized,  under  the  direction 
of  the  presidents'  committee,  to  enter  into  agreements  with  competing  roads,  not 
parties  to  the  contract,  for  the  establishment  of  joint  tariff's,  and  the  maintenance  of 
the  same. 

SEC.  42.  None  of  the  affiliated  roads  shall  enter  into  traffic  arrangements  with  roads 
whose  tariffs  affect  the  tariffs  established  under  the  contract,  except  upon  the  condi- 
tion that  such  roads  shall  maintain  the  said  tariffs  or  enter  into  agreements  for  the 
establishment  and  maintenance  of  special  tariffs  on  competitive  traffic.  In  case  no 
such  agreements  can  be  made,  such  joint  action  shall  be  taken  by  the  trunk  lines  as 
may  be  necessary  for  their  protection. 

SEC.  43.  None  of  the  trunk  lines  nor  their  affiliated  roads  shall  make  reductions  in 
the  established  tariffs  on  the  plea  that  some  competing  road  not  party  to  the  contract 
has  made  reductions  affecting  said  tariffs,  but  the  case  shall  be  reported  through  the 
commissioner  to  the  executive  committee  for  joint  action. 

The  above  is  a  correct  copy  of  the  organization  and  rules  adopted  by  the  trunk 
lines  named  on  page  1.  [This  refers  to  page  1  of  the  copy  of  the  trunk-line  contract, 
submitted  by  Mr.  Fink.  ] 

ALBERT  FINK, 

Commissioner. 


Schedule  of  rates  on  grain  from  Chicago  to  Newi  York  (in  cents  per  100  pounds)  via  all-rail 
and  via  lake-and-canal,  respectively. 


Date. 

Grain. 

Date. 

Grain. 

All-rail. 

Lake  and 
canal 
average 
per  year. 

All-rail. 

Lake  and 
canal 
average 
per  year. 

1864. 
Mar.  28  to  Apr.    3  

$1  00 
90 
80 
75 
80 
85 
80 
90 
95 
1  00 
1  15 
1  25 
1  38 
1  60 

•$0  46.4 

1865. 
Jan.    1  to  Apr  21 

$1  60 
1  00 
70 
62* 
70 
77J 
85 
95 
1  05 
1  15 
1  20 
1  30 

$0  43.3 

Apr.    4  to  Apr.  11..  

Apr.  22  to  May  14 

Apr.  12  to  Apr.  13  

Mav  15  to  Sept.   5 

Apr.  14  to  July  10  

Sep't.   6  to  Sept.  10 

July  11  to  July  21  

Sept  11  to  Sept.  26 

Jul  v  22  to  July  27  

Sept  27  to  Oct.     9 

July  28  to  Sept.   6  

Oct.  10  to  Oct    16 

Sept   7  to  Sept.   9  

Oct.   17  lo  Oct    96 

Sept.  10  to  Nov.  11  

Oct.   27  to  Nov     1 

Nov.  12  to  Nov.  15  

Nov.    2  to  Nov.    6 

Nov.  16  to  Nov.  27  

Nov.    7  to  Nov.    8 

Nov.  28  to  Dec.  12  

Nov.    9  to  Dec.  31 

Dec.  13  to  Deo.  23  

Dec.  24  to  Dec.  31  ... 

INTERSTATE    COMMERCE.  245 

Schedule  of  rates  on  grain  from  Chicago  to  New  Yorlc,  fo. — Continued. 


Date. 

Grain. 

Date. 

Grata. 

All-rail. 

Lake  and 
canal 
average 
per  year. 

AU-rail. 

Lake  and 
canal 
average 
per  year. 

1866. 

$1  30 
80 
70 
55 
60 
65 
75 
85 
90 
1  00 
1  05 
90 

$0  90 
80 
70 
60 
50 
75 
70 
75 
85 

85 
60 
65 
70 
75 

75 
70 
50 

50 
55 
50 
45 
40 
45 
50 
55 
60 

60 
50 
45 
40 
45 
50 
55 
60 
65 

0  65 
60 
50 
45 
50 
55 
60 
65 

65 
60 
45 
50 
55 
60 

•  $047.8 

36.9 

j>    36.0 
I     37.2 

•     28.4 

•     33.5 

40.3 
I       31.6 

1874. 
Jan.     1  to  Feb.    2  

$060 
55 
40 
45 
40 

40 
30 
40 
45 

45 
40 
35 
22J 
20 
30 

30 
35 
30 
35 
40 

040 
30 
25 
20 
25 
30 
85 

85 

20 
15 
20 
25 
30 
35 
40 

40 
35 
30 
35 

35 
30 

25 
30 
25 
15    to  20 

12J  to  20 
12f  to  15 
20 

124  to  20 

20 
25 
SO 

30 
25 
30 

Uo  22.9 
I      18.8 
I      15.9 
I      18.2 

15.1 

19.0 
>      20.2 

•       13.3 

\       13.0 
V       14.0 

Jan     9  to  Feb.  25        

Feb.    StoApr.   14  

Feb.  26  to  May  10  

Apr.  15  to  May    5  

May  11  to  Jane   6  

May   6  to  Dec.  10  

Dec.  11  to  Dec.    31  

July    5  to  Sept.  17      

1875. 
Jan.    1  to  Sept  30  

Sept.  18  to  Sept.  26  

Sept.  27  to  Oct.     9  

OCT.   10  to  Oct.   14  

Oct.   15  to  Nov.    4  

Oct     1  to  Oct   11  

Jfov     5  to  Deo.    7 

Oct    12  to  Nov.  30 

Dec.    8  to  Dec   31 

Dec.    1  to  Deo.   31  

1867. 

Jan.    1  to  Feb.    6  
Feb.    7  to  Mar.    3  

1876. 
Jan.    1  to  Mar.    6  

Mar.   4  to  Mar.  21  
Mar.  22  to  Apr.  14  
Apr.  15  to  Jnue  7  

Apr.  13  to  Apr.  25  
Apr.  26  to  May     4  
May     5  toDec.  17  

June  21  to  Sept.  1  
Sept.  2  to  Sept.  22  

Dec.    18  to  Dec.  31  
1877. 
Jan      1 

Sept  23  to  Dec.  31  

1868. 
Jan.    ItoAng.  31  

Jan.     2  to  Apr.     1........ 

Apr.    2  to  Sept.    3  
Sept.    4  to  Oct.    16  

Sept   7toSeptl3  
Sept.  14  to  Dec.    6  

Oct.    17  to  Dec.  31  
1878. 

Deo.    7  to  Dec.  31  

1869. 

Jan.    1  to  Jan.  24  
Jan.  25  to  Mar.  10           .... 

Mar.  11  to  Mar.  31  

Apr.   1  to  May  16  
May  17toAng.  4  

Mar.lltoDec.  31  
1870. 
Jan.     1  to  Jan.  21  

Aug.   5  to  Aug.  16  
Aug.  17  to  Nov.  24  
Nov.  25  to  Dec.  31  

1879. 
Jan.    1  to  Mar.  23  

Jan.  22toMar.    3  

Mar.  22  to  May  22  
May  23  to  Aug.  28  
Aug.  29  to  Aug.  30  
Aug.SltoOct.  30  

Mar.24toJnne   8  
June  9  to  June  22  
June  23  to  Aug.  3  
Aug.   4  to  Aug.  24  

Oct.  31  to  Nov.  21  
Nov.  22  to  Dec.  31  

1871. 

Jan.     1  to  Mar.    3  
Mar.    4  to  Apr.    6  
Apr.    7  to  June  25  

Oct  13  to  Nov.    9  
Nov.lOtoDec.  31  

1880. 

Jan.     1  to  Feb.  29  
Mar.   1  to  Apr.  13  

June  26  to  July    9  
July  10  to  Aug.  10  
Aug.  11  to  Sept.  20 

Apr.  14  to  Nov.  21  
Nov.22toDec.   31  

1881. 
Jan.    1  to  Mar.  31  

Sept.  21  to  Oct.    1  
Oct.     2  to  Oct.  24  

Oct.  25  to  Dec.  31  
1872. 

Jan.     1  to  Mar.  24  
Mar.  25  to  Apr.  30  
May    1  to  Aug.  25  

Apr.lltoApr.   17  
Apr.  18  to  June    7  

June  8  to  June  14  
June  15  to  Sept.  25  
Sept  26  to  Oct.     9  

Aug.  26  to  Sept.    1  
Sept    2toSept.    8  
Sept.    9toSept.  K  
Sept.  16  to  Oct.    13  

Nov.    1  to  Dec.    8  
Dec.    9toDec.  31  

1882. 

Oct.    14toDec.   31  

1873. 

Mar.  31  to  Nov.  30  

Dec.    1  to  Dec.  31  

Apr.  14  to  May  19  

1883. 

Jan.    ItoApr.  18  

Apr  19  to  Nov.  25  

May  20  to  Sept   4  
Sept,    5  to  Nov.  19  

Nov.  20  to  Dec.    7  
Dec.    8  to  Dec.  31  

Nov.  26  to  Dec.  31  

246 


INTERSTATE    COMMERCE. 


Statement  showing  total  receipts  and  txports  of  flour  and  grain  at  the  five  Atlantic  cities 
(2few  York,  Philadelphia,  Baltimore,  Boston,  and  Montreal')  during  the  years  named  be- 
low; also  percentages  of  each  city  of  total  receipts  and  exports. 

RECEIPTS. 


Tears. 

Total  receipts  of 
the  flvo  Atlan- 
tic cities. 

Percentages  of  each  city  of  total  receipts. 

New  York. 

"• 
•o 

«.a 

—  ,0 
.C  ft 
Pi 

1 

1 

1 
S 

Canal. 

RaiL 

Coast. 

Total. 

1860  .  .  . 

Buthelt. 
85,  427,  151 

63.5 

57.5 
61.2 
55.3 
57.9 
55.0 
66.2 
56.4 
53.4 
52.  8 
55.8 
52.3 
45.8 
50.3 
52.06 
49.06 
49.51 
52.  39 
54.20 
51.9 
51.6 

7.3 
8.6 
7.7 
8.8 
11.7 
12.3 
12.3 
12.7 
14.2 
14.3 
12.8 
15.7 
17.4 
12.5 
15.49 
14.25 
14.43 
10.69 
9.21 
9.2 
9.2 

11.2 
11.4 
8.6 
13.1 
11.6 
11.7 
11.1 
11.0 
12.1 
11.2 
12.9 
12.2 
16.9 
10.9 
10.04 
20.09 
17.76 
16.  25 
13.76 
14.9 
14.8 

10.4 
14.3 
11.6 
]2.5 
11.0 
10.0 
10.5 
9.6 
10.0 
10.3 
9.3 
10.2 
10.9 
11.3 
9.29 
9.86 
10.88 
13.41 
14.96 
16.2 
16.4 

7.6 
8.2 
10.9 
10.3 
7.8 
11.0 
9.9 
10.3 
10.3 
11.4 
9.2 
9.6 
9.0 
9.0 
7.12 
6.74 
7.42 
7.26 
7.87 
7.8 
8.0 

1865  

93,  753,  6.1,0 
97,  522,  106 
87,  112,  779 
106,  769,  296 
118,  268.  926 
124,461,841 
158,  805,  433 
170,  234,  499 
174,  525,  321 
192,  452,  353 
179,  875,  321 
209,  082,  401 
205,  420,  366 
293,  576,  061 
332,  4(i5,  424 
341,  3  19,  702 
267,000,167 
211,  074,  646 
244,  125,  630 
225,  750,  979 

1866  

1867  

3868  

1869  
1870  

"27."9" 
33.1 
29.7 
24.5 
24.6 
21.1 
15.6 
23.5 
21.76 
17.15 
20.33 
14.31 
15.23 
17.2 
16.9 

'~25.'»~ 

21.7 
22.4  . 
27.5 
30.0 
30.1 
28.2 
24.8 
29.07 
30.66 
27.  95 
36.91 
37.79 
33.1 
33.6 

""i'i" 

1.6 
1.3 
0.8 
1.2 
1.1 
2.0 
2.0 
1.23 
1.25 
1.  23 
1.17 
1.18 
1.6 
1.1 

1871  

1872  

187:}  

1874  

1875  

1876    

1877  

1878    .. 

1879  

1880  

1881  

1882  ... 

1883... 

1884  

EXPORTS. 


Yean. 

Total  exports  of 
the  five  Atlan- 
tic cities. 

Percentages  of  each  city  of  total  exports. 

New  York. 

Philadel- 
phia. 

1 

| 

Montreal. 

1873  

Bushels. 
87,  407,  846 
104,  994,  100 
90,313,244 
125,  771,  730 
124,  582,  116 
212,  497,  231 
249,  942,  748 
265,  383,  823 
182,  488,  004 
124.  063,  242 
150,  585,  254 
128,  001,  203 

62.10 
62.94 
56.12 
44.13 
50.10 
50.74 
49.75 
50.95 
52.80 
57.01 
48.8 
50.5 

5.50 
a.  36 
9.80 
17.50 
10.82 
14.06 
12.93 
12.01 
8.99 
6.12 
7.8 
6.0 

10.35 
11.96 
12.63 
19.69 
20.74 
18.69 
22.26 
19.20 
18.77 
10.95 
18.2 
18.7 

2.45 
3.03 
4.42 
4.80 
4.79 
6.09 
6.31 
7.71 
9.39 
8.18 
14.4 
12.6 

19.60 
15.71 
17.03 
13.88 
13.55 
10.42 

a  75 

10.13 
10.05 
11.74 
10.8 
11.3 

1874  

1875  

1876  

1877  

1678  

1879  

1880                  

1881  

1882 

1883  

1884  

NOTE. — The  above  statement  was  compiled  from  annual  reports  of  the  New  York  Produce  Ex- 
change, with  the  exception  that  the  percentages  of  Kew  Yoik  via  canal,  rail,  and  coast,  respectively, 
of  the  total  receipts  for  the  years  1870  to  1875,  inclusive,  were  prepared  from  statement  on  page  198  of 
the  Railroad  Gazette  of  April  19,  1878,  and  the  receipts  and  exports  for  1884  from  the  New  York  Pro- 
duce Exchange  Weekly  of  January  2,  9,  and  16,  1885. 


INTERSTATE    COMMEKCE. 


247 


Statement  showing  the  tariff  rates  on  grain  from  Chicago  to  Neio  York  (in  cents  per  hundred 
pounds),  via  all  rail,  and  average  rate  via  lake  and  canal,  during  the  year  ending  December 
01,  1884. 


Date. 

Grain. 

All  rail 

Lake  and  canal 
average  for 
year. 

30 
20 
30 
20 
15 
20 
25 

11.7 

March  14  to  March  20  

March  21  to  June  23  

June  24  to  July  20         

July  21  to  December  31  

Tariff  rates  (  all  rail)  from  New  York  to  Chicago  (in  cents  per  hundred  pounds). 


Date. 

First 
class. 

Second 
class. 

Third 
class. 

Fourth 
class. 

Special. 

January  1  to  December  31,  1884  

75 

60 

45 

35 

25 

Statement  showing  average  quotations  of  ocean  rates  (reduced  to  cents  per  100  pounds)  on 
grain  from  seaboard  cities  named  below  to  Liverpool  by  steamers,  and  to  Cork,  for  orders 
by  sailing  vessels  during  1he  year  1884.  Compiled  from  New  York  Produce  Exchange  re- 
ports. Average  quotations  reduced  to  cents  per  WO  pounds. 


To  Liverpool  by  steamers. 

To  Cork  for  orders  by 
sailing  vessels. 

"3 

t 

| 

8_i 

Is 

"3 

Period. 

1* 

| 

S 

i 

J2 

19 

£ 

J 

S 

1 

2  d 

8 

o'S 

§1 

t 

S- 

i 

1 

A 

M 

M  ~ 

Sz< 

i 

P 

Cl 

p 

a 

s"3 

S 

fl 

p 

1 

£ 

1 

1 

1 

k* 

1 

! 

i 

Centt. 

Cento. 

Centt. 

Cento. 

Centt. 

Centt. 

Cento. 

O«nte. 

Onto. 

First  six  months  of  1884.  .  . 

8.2 

9.2 

10.3 

12.2 

7.0 

22.7 

19.8 

15.7 

16.3 

Second  six  months  of  1884. 

15.3 

16.2 

15.7 

15.7 

13.0 

31.5 

23.7 

20.3 

22.0 

Entire  year  of  1884  

11.7 

11.7 

13.0 

13.8 

11.2 

24.5 

21.8 

17.8 

19.2 

Statement  shmving  tlie  differences  in  cents  per  WO  pounds  in  the  average  quotations  of  ocean 
rates  on  grain  at  Philadelphia,  Baltimore,  Boston,  and  Montreal,  as  compared  tcith  New 
York.  The  differences  above  New  York  rates  are  marked  -f-,  and  those  below  New  York 
are  marked  — . 


Period. 

To  Liverpool  by  steamers. 

To  Cork  for  or- 
ders by  sail- 
ing vessels. 

From  Philadel- 
phia. 

From  Baltimore. 

p 

I 

§ 

"5*5 
o  o 

S 

•3 
j 

3a 
KJ 

From  Baltimore. 

First  six  months  of  1884..  

Cent*. 
+0.9 

Centt. 
+2.1 
+  0.4 
+1.3 

Centt. 
+4.0 
+0.4 
+2.1 

Centt. 
-1.2 
-2.3 
-0.5 

Centt. 
+14.5 
+16.2 
+12.8 

Centt. 
-4.1 
-3.4 
-4.0 

Centt. 
-3.5 
-1.7 
-2.6 

Entire  year  of  1884          .   ......  ...  .  ..... 

INDEX. 


Agriculture, 

Relations  to  commerce  of.  Report 25 

Alabama, 

Railroad  laws  of.  Report 83 

Allen,  Charles  H., 

Statement  of.     Appendix 192 

Anti-Monopoly  League, 

Statement  of.  Appendix 105 

Apthorp,  Henry, 

Views  of.  Appendix 55 

Arizona, 

Railroad  laws  of.  Report 85 

Arkansas, 

Railroad  laws  of.  Report 85 

Arnold,  Alexander  A., 

Answers  to  circular  of  committee.  Appendix 118 

Baker,  R.  W., 

Statement  of.  Appendix 103 

Beebe,  W.  H., 

Statement  of.  Appendix 211 

Boise,  R.  P., 

Statement  of.  Appendix 114 

Bond,  Frank  8., 

Answers  to  circular  of  committee.  Appendix 77 

Bragg,  W.  L., 

Answers  to  circular  of  committee.  Appendix 50 

Brocksmit,  J.  C., 

Answers  to  circular  of  committee.    Appendix 188 

Burlington  Board  of  Trade, 

Answers  to  circulars  of  committee.    Appendix 94 

California, 

Railroad  laws  of.     Report 86 

Callahan,  Ethelbert, 

Statement  of.  Appendix 181 

Carr,  S,  C., 

Answers  to  circular  of  committee.  Appendix 125 

Chapin,  Charles  A., 

Statement  of.     Appendix - 212 

Circular  of  Committee, 

Appendix - 1 

249 


250  INDEX. 

Page. 
Classification, 

Uniformity  in.     Report 187 

Colorado, 

Railroad  laws  of.  Report . 91 

Committee, 

Circular  of.  Appendix 1 

Common  Carriers, 

Legal  status  of.  Report 39 

Congress, 

Powers  of.  Report 28 

Connecticut, 

Railroad  laws  of.  Report 93 

Connecticut  Railroad  Commission, 

Answers  to  circular  of  committee.  Appendix 56 

Cooley,  T.  M., 

Views  of.  Appendix 8 

Concessions  to  large  Shippers, 

System  of.  Report 190 

Cotton, 

Tabular  statements  relative  to.  Report T 21 

Coulter,  S.  T., 

Statement  of.  Appendix 116 

Couplers, 

Statement  of  Mr.  Russell  relative  to.  Appendix 235 

Cox,  Charles  E., 

Statement  of.    Appendix 211 

Dakota, 

Railroad  laws  of.  Report 95 

Delaware, 

Railroad  laws  of.  Report 97 

Department  of  Railroads, 

Establishment  of.    Appendix 100 

Discriminating  Rates, 

Limitations  on.    Report 182,188,191 

England, 

Railroad  legislation  in.    Report 54 

Erie  Canal, 

Trafflcon.     Report 170 

Pink.  Albert, 

Statement  of.    Appendix 237 

Florida, 

Railroad  laws  of.    Report 98 

Foye,  Charles  H., 

Answers  to  circular  of  committee.     Appendix 53 

Freight  Rates, 

Legislation  impracticable  for.     Report 194 

Principles  for  establishing.     Report 182 

George,  Milton, 

Answers  to  circular  of  committee.     Appendix 117 


INDEX.  251 

Georgia, 

Railroau  commission  of.     Appendix 99 

.Railroad  laws  of.    Report .....I.. I  78 

Grand  Trunk  Railway, 

Business  of.  Appendix 37 

Giller,  E.  A.. 

Answers  to  circular  of  committee.  Appendix 120 

Gillis,  D.f 

Statement  of.  Appendix 125 

Gregg,  D., 

Statement  of.  Appendix 232 

Grubbs,  JohnW., 

Answers  to  circular  of  committee.  Appendix 172 

Haines,  H.  S., 

Statement  of.  Appendix 126 

Hamilton,  J.  M., 

Answers  to  circular  of  committee.  Appendix 185 

Hanson,  J.  F., 

Answers  to  circular  of  committee.  Appendix 170 

Hayes,  J.  D., 

Statement  of.  Appendix 190 

Hennepin  Canal, 

Construction  of.    Report 173 

Memorial  in  favor  of.     Appendix 207 

Higgs,  A.  P., 

Statement  of.     Appendix 237 

Idaho, 

Railroad  la  we  of.     Report 98 

Illinois, 

Railroad  laws  of.     Report 71 

Indiana, 

Railroad  laws  of.     Report 98 

Interstate  Commerce, 

Amount  of  State  traffic  compared  with.    Report 137 

Definition  of.    Report   32 

Difficulties  of  regulating,  by  Government.    Report 43 

Modes  of  regulating.    Report 52 

Necessity  for  national  regulation  of.     Report 175 

Powers  of  Congress  to  regulate.     Report 28 

Relations  to  agriculture.     Report 25 

Tabular  statements  of.     Report 14 

Iowa, 

Railroad  laws  of.  Report 98 

Jewelers, 

Statement  of.  Appendix 104 

Kansas, 

Railroad  laws  of.    Report 102 

Kansas  Railroad  Commissioners, 

Views  of.     Appendix 2 

Kentucky, 

Railroad  laws  of.     Report 107 


252  INDEX. 

Page. 
Kentucky  Railroad  Commission, 

Views  of.  Appendix 14 

Kernan,  John  D., 

Views  of.  Appendix 1& 

Leighton,  George  E., 

Statement  of.  Appendix 160 

Long  and  Short  Hauls, 

Rates  on.    Report 195 

Louisiana, 

Railroad  laws  of.    Report 107 

Luce,  Cyrus  GK, 

Answers  to  circular  of  committee.     Appendix 110 

Lyman,  J.  D. 

Answers  to  circular  of  committee.     Appendix 120 

Maine, 

Railroad  laws  of.     Report 107 

Maine  Railroad  Commissioners, 

Views  of.     Appendix 53 

Maryland, 

Railroad  laws  of.    Report 109 

Massachusetts, 

Railroad  laws  of.     Report 66 

Maxwell,  Sidney  D., 

Views  of.     Appendix 74 

Michigan, 

Railroad  laws  of.     Appendix 34 

Railroad  laws  of.     Report „ 109 

Railroad  traffic  in.     Appendix 37,39 

Railroads  of.    Appendix ~. 32 

Michigan  and  Mississippi  Canal, 

Memorial  in  favor  of.     Appendix 207 

Michigan  and  Mississippi  Canal  Commission, 

Statement  of.     Appendix 199 

Michigan  Railroad  Commissioners, 

Views  of.     Appendix..... 32 

Midgley,  J.  W., 

Statement  of.     Appendix 226 

Minnesota, 

Railroad  laws  of.    Report 109 

Mississippi, 

Railroad  laws  of.    Report Ill 

Mississippi  River, 

Improvement  of.     Report 173 

Missouri, 

Railroad  laws  of.    Report 112 

Missouri  Railroad  Commission, 

Views  of.     Appendix 47 

Mix,  James, 

Statement  of.     Appendix I<s3 

Monarch  Parlor  Sleeping-Car  Company, 

Statement  of.     Appendix 237 


INDEX.  253 

Page. 
Montana, 

Railroad  laws  of.  Report 113 

Morgan,  Richard  P., 

Answers  to  circular  of  committee.  Appendix 179 

Heal,  J.  L., 

Answers  to  circular  of  committee.  Appendix 121 

Nebraska, 

Eailroad  laws  of.  Report 113 

.Nelson,  W.  H., 

Statement  of.  Appendix Ill 

Nevada, 

Railroad  laws  of.  Eeport 115 

New  Hampshire, 

Railroad  laws  of.  Report 116 

New  Jersey, 

Railroad  laws  of.  Eeport 118 

New  Mexico, 

Railroad  lawsof.  Report 118 

New  York, 

Railroad  lawsof.     Report 74 

New  York  Stock  and  Petroleum  Exchange, 

Answers  to  circular  of  committee.     Appendix 102 

North  Carolina, 

Railroad  laws  of.     Report 118 

Norton,  Miles, 

Answers  to  circular  of  committee.     Appendix 122 

Ohio, 

Railroad  laws  of.     Report 119 

Ohio  Railroad  Commissioner, 

Views  of.  Appendix 55 

Oregon, 

Railroad  laws  of.  Report 119 

Pennsylvania, 

Railroad  laws  of.  Report 122 

Peoria  Board  of  Trade, 

Answers  to  circular  of  committee.  Appendix 103 

Perkins,  Charles  E., 

Statement  of.  Appendix 213 

Pittsburgh  Chamber  of  Commerce, 

Answers  to  circular  of  committee.  Appendix 75 

Pooling, 

System  of.     Report 200 

Pratt,  George  C., 

Views  of.     Appendix 47 

Publicity  of  Rates, 

Advantages  of.     Report 198,201,202,205,206 

Railroad  Commissions, 

Of  England.     Report 54 

Of  States.     Report 64 


254  INDEX. 


Railroads, 

Alabama  laws  for.     Report.,  .........  .  .........  ..........................        83 

Arizona  laws  for.     Report  ..........................  -  ....................         85 

Arkansas  laws  for.     Report  ./.  ............................................        St 

California  laws  for.     Report  .............................................        86 

Colorado  laws  for.     Report  ..............................................        91 

Complaints  against.     Report  .............................................  180 

Connecticut  laws  for.     Report  ........................................... 

Dakota  laws  for.     Report  ............................................... 

Delaware  laws  for.     Report  ............................................. 

English  system  of.    Report  .............................................. 

Florida  laws  for.     Report  ................................................ 

Georgia  laws  for.     Report  .........................  .  ..................... 

Idaho  laws  for.    Report  ................................................. 

Illinois  laws  for.      Report  ............................................... 

Indiana  laws  for.     Report  .............  ..  ................................ 

Introduction  of.     Report  ................................................ 

Iowa  laws  for.    Report  .................................................. 

Kansas  laws  for.     Report  ...............................................  102 

Kentucky  laws  for.     Report  .............................................  107 

Legal  status  of.     Report  .................................................        39 

Louisiana  laws  for.     Report  ............  ..................................  107 

Magnitude  of  service  by.     Report  ........................................         10 

Maine  laws  for.     Report  .................................................  107 

Management  of.     Report  ...............  .  ................................        45 

Maryland  laws  for.     Report  ............................................  109 

Massachusetts  laws  for.     Report  .........................................        66 

Michigan  laws  for.     Report  ........................  .......................  109 

Minnesota  laws  for.    Report  .............................................  109 

Mississippi  laws  for.     Report  .............................................  Ill 

Missouri  laws  for.    Report  ...............................................  112 

Modes  of  regulating.     Report  ............................................         5* 

Montana  laws  for.    Report  ..........  .  ...............................  ____  113 

Nebraska  laws  for.    Report  ..............................................  113 

Nevada  laws  for.    Report  ................................................  115 

New  Hampshire  laws  for.    Report  .......................................  116 

New  Jersey  laws  for.    Report  ...........................................  lie 

New  Mexico  laws  for.    Report  ....................  .  .....  .  ................  118 

New  York  lasvs  for.     Report  .............................................        74 

North  Carolina  laws  for.     Report  ........................................  118 

Ohio  laws  for.     Report  ..................................................  115- 

Oregon  laws  for.    Report  ................................................  1  1  G 

Overbuilding  of.     Report..^.  ............................................         46 

Overcapitalization  of.    Repoi't  ...........................................        51 

Pennsylvania  laws  for.     Report  ..........................................  122 

Progress  in  construction  of.    Report  _____  ................................. 

Protection  of  stockholders  of.  Report  .....................................        47 

Eolations  to  public  and  Government.  Report  ..............................        40 

Rhode  Island  laws  for.  Report  ...........................................  124 

South  Carolina  laws  for.  Report  .........................................  125 

Tennessee  laws  for.  Report  ...............  .  ...............................  127 

Texas  laws  for.  Report  ..................................................  131 

Utah  laws  for.  Report  .........  ..........................................  132 

Vermont  laws  for.  Report  ...............................................  132 

Virginia  laws  for.  Report  ................................................  132 

Washington  Territory  laws  for.  Report  ...................................  134 

West  Virginia  laws  for.    Report  .........................................  134 

Wisconsin  laws  for.    Report  ........................................  .  ____  135 

Wyoming  laws  for.     Report  .............................................  137 

Randolph,  Charles, 

Views  of.     Appendix  .....................................................         57 

Raonl,  W.  G., 

Statement  of.     Appendix  .   .  ..............................................  147 

Rhode  Island, 

Railroad  laws  of.     Report  ...............................................  124- 


INDEX.  255- 
Page. 
Richmond  Grain  and  Cotton  Exchange, 

Answers  to  circular  of  committee.  Appendix 98 

Ridgely,  Charles. 

Views  of.  Appendix 62 

Robbins,  Daniel  C., 

Appendix .. 101 

Robinson,  William  EL, 

Answers  to  circular  of  committee.    Appendix 176 

Rose,  A.  J., 

Answers  to  circular  of  committee.    Appendix 119 

Russell,  Thomas, 

Statement  of.     Appendix 235 

San  Francisco  Chamber  of  Commerce, 

Answers  to  circulars  of  committee.    Appendix 96 

Seymour,  Horatio, 

Letter  from.    Appendix 46 

Shuey,  W.  H., 

Statement  of.     Appendix 236 

Simmons,  E.  C., 

Answers  to  circular  of  committee.     Appendix....... 166 

Smith,  B.  F., 

Statement  of.    Appendix 197 

South  Carolina, 

Railroad  laws  of.     Report 125 

Southwestern  Railway  Association, 

Statement  of.     Appendix 226 

Springfield,  Illinois, 

Statement  of  merchants  of.     Appendix 231 

State  and  Interstate  Traffic, 

Comparative  amounts  of 137 

Statements  by — 

Allen,  Charles  H.    Appendix 192 

Anti-Monopoly  League.     Appendix 105 

Apthorp,  Henry.     Appendix 55 

Arnold,  Alexander  A.     Appendix 118 

Baker,  R.  W.     Appendix 103 

Beebe,  W.  H.     Appendix 211 

Boise,  R.  P.     Appendix 114 

Bond,  Frank  S.     Appendix 77 

Bragg,  W.  L.     Appendix 50 

Broeksmit,  J.  C.     Appendix 188 

Burlington  Board  of  Trade.     Appendix 94 

Callahan.Ethelbert.     Appendix 181 

Carr.S.C.    Appendix   125 

Chapin,  Charles  A.    Appendix 212 

Connecticut  Railroad  Commission.     Appendix 56 

Cooley,  T.  M.     Appendix 8 

Coulter,  S.T.     Appendix 116 

Cox,  Charles  E.     Appendix 211 

Fink,  Albert.     Appendix 237 

Foye,  Charles  H.   Appendix 53 

George,  Milton.    Appendix 117 

Giller,E.A.   Appendix 120 

Gillis.D.   Appendix 125 

Gregg,  D.   Appendix 232 

Grubbs,  John  W.   Appendix 172 


256  INDEX. 

Page. 
Statements  by — Continued. 

Haines,  H.  S.   Appendix 126 

Hamilton,  J.  M.   Appendix 185 

Hanson,  J.  F.  Appendix 170 

Hayes,  J.  D.     Appendix 190 

Higgs,  A.  F.     Appendix 237 

Jewelers.     Appendix 104 

Kansas  Kailroad  Commissioners.     Appendix 2 

Kentucky  Railroad  Commission.     Appendix 14 

Kernaii,  John  D.     Appendix 15 

Leighton,  George  E.     Appendix 160 

Lnce,  Cyrus  G.    Appendix 110 

Ly man.  J.  D.     Appendix 123 

Maine  Railroad  Commissioners.    Appendix 53 

Maxwell,  Sidney  D.     Appendix 74 

Michigan  and  Mississippi  Canal  Commission.    Appendix 199 

Michigan  Railroad  Commissioners.     Appendix 32 

Midgley,J.W.    Appendix 226 

Missouri  Railroad  Commissioner.     Appendix 47 

Mix,  James.     Appendix 183 

Monarch  Parlor  Sleeping-Car  Company.     Appendix 237 

Morgan,  Richard  P.     Appendix 179 

Neal,  J.  L.     Appendix 121 

Nelson,  W.  H.     Appendix Ill 

New  York  Stock  and  Petroleum  Exchange.     Appendix 102 

Norton,  Miles.     Appendix 122 

Ohio  Railroad  Commissioner.    Appendix 55 

Peoria  Board  of  Trade.    Appendix 103 

Perkins,  Charles  E.    Appendix 213 

Pittsburgh  Chamber  ot  Commerce.    Appendix 75 

Pratt,  George  C.     Appendix 47 

Randolph,  Charles.     Appendix. 57 

Raoul,  W.  G.    Appendix 147 

Richmond  Grain  and  Cotton  Exchange.    Appendix 98 

Ridgely,  Charles.     Appendix 62 

Robbins,  Daniel  C.     Appendix 101 

Robinson,  William  H.    Appendix 176 

Rose,  A.  J.    Appendix 119 

Russell,  Thomas.    Appendix 235 

San  Francisco  Chamber  of  Commerce.  Appendix 96 

Seymour,  Horatio.    Appendix 46 

Shuey.W.  H.    Appendix 236 

Simmons,  E.G.    Appendix 166 

Smith,  B.  F.    Appendix 197 

South  Western  Railway  Association.     Appendix 226 

Springfield,  111. ,  merchants.     Appendix 231 

Stern,  B.     Appendix 192 

Sturgeon,  Isaac  H.     Appendix 161 

Sturgis,  Thomas.    Appendix 157 

Thompson,  John  S.     Appendix 210 

Toledo  Produce  Exchange.     Appendix 69 

Tracy,  Frank  W.    Appendix 174 

Traders  and  Travellers'  Union.     Appendix 101 

Trusler,  Milton.    Appendix . 124 

Updegraff,  Thomas.    Appendix 188 

Utley,  Joseph.    Appendix 233 

Wilson,  F.  C.     Appendix 197 

Wilson,  William.    Appendix 126 

Woodman,  J.  J.    Appendix 108 

Woodruff,  George  M.     Appendix 56 

Woodruff,  M.  C.     Appendix 186 

Worcester  Excursion-Car  Company.    Appendix 236 

Wright,  George  B.    Appendix 84 

States, 

Railroad  Commissions  of.    Report ._ 64 

Stern,  B., 

Statement  of.     Appendix 192 


INDEX.  257 

Page. 
Sturgeon,  Isaac  H., 

Statement.  Appendix. 161 

Sturgis,  Thomas, 

Statement  of.  Appendix 157 

Tennessee, 

Railroad  la, \VH  of.  Rtport 127 

Texas, 

Railroad  laws  of.     llcport 131 

Thompson,  John  S., 

Statement  of.     Appendix 210 

Toledo  Produce  Exchange, 

Answers  to  circular  of  committee.     Appendix 72 

Tracy,  Frank  W., 

Answers  to  circular  of  committee.  Appendix 174 

Traders  and  Travellers'  Union, 

Answers  to  circular  of  committee.  Appendix 101 

Trunk  Lines, 

Freight  agreement  of.     Appendix 237 

Organization  and  rules  of.  Appendix 240 

Trusler,  Milton, 

Answers  to  circular  of  committee.  Appendix 124 

United  States, 

Railroad  legislation  in.  Report 63 

Updegraff,  Thomas, 

Answers  to  circular  of  committee.    Appendix 188 

Utah, 

Railroad  laws  of.     Report 132 

Utley,  Joseph, 

Statement  of.     Appendix 233 

Vermont, 

Railroad  lawa  of.     Report 132 

Virginia, 

Railroad  laws  of.     Report 132 

Washington  Territory , 

Railroad  laws  of.  Report 134 

Water  Routes, 

Effect  on  railway  charges  of.  Report 167 

West  Virginia, 

Railroad  laws  of.  Report 134 

Wilson,  F.  C., 

Statement  of.  Appendix 197 

Wilson,  William, 

Statement  of.    Appendix 126 

Wisconsin, 

Railroad  laws  of.     Report 135 

Witnesses.    (See  STATEMENTS.) 

Woodman,  J.  J., 

Answers  to  circular  of  committee.     Appendix 106 


258  INDEX. 

Page. 
Woodruff  George  M., 

Answers  to  circular  of  committee.  Appendix 56 

Woodruff;  M.  C., 

Answers  to  circular  of  committee.  Appendix 186 

Worcester  Excursion-Car  Company, 

Statement  of.     Appendix 236 

Wright,  George  B., 

Answers  to  circular  of  committee.     Appendix 84 

Wyoming, 

Railroad  laws  of.     Report 137 


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